Official inflation and growth projections for 1995 are being revised, to around 37 per cent and 3.8 per cent respectively, according to senior officials. This disclosure follows the announcement that the government will submit a new letter of intent to the IMF by mid-February (MEED 27:1:95, Stock Market Watch).

The announcement was made in New York on 19 January during discussions with the IMF by a delegation led by Emre Gonensay, chief economic advisor to Prime Minister Tansu Ciller. Targets pledged in the government's previous IMF letter of intent were 4.4 per cent growth and a reduction in annualised inflation to 22.5 per cent by end-1995 (MEED 1:8:94).

The IMF approved a stand-by facility of SDR 509.3 million ($742 million) on 8 July to help the country out of last year's economic crisis (MEED 22:1:94). Two of four tranches have already been drawn down, but the government has had to meet IMF performance criteria each time.

However, the government came nowhere near to meeting its target of a 20 per cent reduction in inflation in the second half of 1994. The annualised inflation rate in December was 125 per cent.

The revised 1995 projections will probably still aim to keep the deficit down to the original target of TL 198 million million ($4,950 million). Business leaders have welcomed the more realistic approach, but few believe that inflation in 1995 will be less than 50 per cent.

The economy contracted last year by an estimated 4 per cent. However, the current account is performing well above expectations, and could end the year with a surplus of some $3,000 million, compared with the anticipated $2,000 million. This is due largely to a pick up in exports on the strength of a cheaper lira and a slump in exports.

Exports increased by 17.7 per cent to $15,801 million in the first 11 months of 1994, compared with January-November 1993. Imports fell by 21 per cent to $20,561 million over the same period.

The central bank's foreign exchange reserves, excluding gold, were boosted in the week ending 20 January to an all-time high of around $8,700 million with the receipt of $1,000 million from the US Federal Reserve (central bank), transferred from an exclusive Turkish Defence Fund which has accumulated since the 1991 Kuwait crisis. The strong reserve position has helped the central bank to relieve pressure on the lira.