The government has been pressured by the IMF into upwardly revising its budget deficit target for 1995 by 11 per cent. The revision came three days after the World Bank announced that it would want more reform successes before committing itself to a $500 million structural adjustment loan (SAL).
The budget deficit target now stands at TL 220 million million ($5,300 million), equivalent to almost 6 per cent of gross domestic product (GDP). Total expenditure for 1995 has been increased by 19 per cent to TL 1,550 million million ($37,000 million – MEED 28:10:94). The government has also revised its inflation target to 40 per cent, up from 22.5 per cent. The changes came after 11 days of talks between the government and the IMF which ended on 20 February. The talks also led to the extension of a $740 million stand-by agreement, signed in May, to the end of the year. It had been scheduled to expire in September.
The new budget forecasts came after the World Bank concluded that Turkey’s structural reform had been too uneven to justify a $500 million SAL. Michael Wiehan, director of the World Bank’s Turkish department, said on 17 February: ‘Rather than pursuing a comprehensive adjustment loan, we should at this time focus bank support on operations aimed at accelerating reform in specific areas of the public sector.’