IMF completes first stage of 7th review of Turkey’s stand-by arrangement
An International Monetary Fund (IMF) mission headed completed yesterday the first stage of the Seventh Review discussions under Turkey's Stand-By Arrangement with the IMF. A follow-up mission is expected to return to Turkey in February.
The discussions focused on the economic policies needed to build on Turkey's economic achievements in 2003 under the arrangement. The mission assessed the budgetary outlook and the measures required to compensate for the cost to the budget of recent increases in pensions and minimum wages, as well as for lower than expected tax revenues.
Throughout the discussions, the government stressed that it remains committed to the 6.5 percent of gross national project (GNP) primary surplus target and that it will take all necessary steps to achieve this goal.
The government has decided to cut discretionary spending by 10 percent to broadly cover the budgetary costs of pension and minimum wage increases and is reviewing a range of options to address the projected revenue shortfall. In this regard, attention is being paid to the quality and sustainability of fiscal adjustment.
The mission also worked with the authorities on developing a timetable for structural reform over the remainder of the arrangement. In particular, it focused on the steps needed to expedite reforms in the banking area. To this end, discussions centered on the financial sector supervisory and legal framework and on ensuring that best international standards, including on governance, were adhered to.
The mission also looked at steps needed to further improve government expenditure management and revenue collection, and to accelerate privatization.
The Stand-By supporting Turkey's economic program covers 2002-04. Of the total fund financing of some $19.1 billion, $2.5 billion remains to be disbursed. Completion of the Seventh Review by the Fund's Executive Board would trigger a disbursement of about $507 million. — (menareport.com)
© 2004 Mena Report (www.menareport.com)