A team from the IMF was to hold talks in Ankara in the first week of May on a stand-by credit of about $1,200 million.

Government officials say a letter of intent could be agreed very soon, opening the way for a return to the international markets, where Turkish risk has been undermined by the foreign exchange crisis and downgradings from leading US ratings agencies.

The IMF team had preliminary talks in Washington with Economy Minister Aykon Dogan. Turkey requires about $4,500 million in 1994 just to meet maturing external debt. Total outstanding foreign debt stood at about $66,000 million at the end of September 1993. Turkish sources say the IMF may also offer the government an extended fund facility.

The IMF is likely to make its assistance conditional on price rises, lower real wages, further depreciation of the lira, cuts in public spending, the further liberalisation of foreign trade, the elimination of subsidies and rapid denationalisation of state economic enterprises (SEEs), Turkish sources say. Prime Minister Tansu Ciller’s austerity package announced on 5 April goes some way towards these conditions, but the IMF team may want more, according to the sources. Turkey last turned to the IMF for support in 1980.