The International Monetary Fund said Friday, january 19, the Turkish economy had recovered from its cash crunch of last year but still needed strict vigilance. The economy had improved "enourmously and significantly" since the liquidity squeeze, which started in late November, IMF Turkey desk chief Carlo Cottarelli told a press conference here.
"Foreign exchange reserves are back to the level before the crisis, interest rates have dropped significantly and the stock exchange has improved strongly," Cottarelli said. "But there is also the need to remain conscious in assessing economic parametres because the disturbance was not a minor one," he added.
Ankara needed to strictly adhere to its three-year, $4 billion stand-by deal with the Fund, and to pay special attention to some areas, such as fiscal policy, privatization and banking, he said.
The official was on the first IMF mission to Turkey since the liquidity squeeze, which wreaked havoc on the money markets, leading to emergency injections of funds by the central bank, record interest rates and a slump on the stock exchange.
After talks in Ankara, the IMF agreed in December last year to release some $10 billion in emergency aid, in return for which Turkey pledged to speed up privatization and reforms in its ailing banking sector. Since then Ankara has announced tenders for the sale of 33.5 percent of Turkish Telekom and 51 percent of Turkish Airlines. It is also working to sell eight of the 11 banks bailed out by banking authorities after failing to fulfil their financial obligations.
IMF banking sector expert Carl Lindgren told the news conference there were still problems in the banking sector, but underlined that they were not of an urgent nature. "All of you are aware that there are weaknesses, but we are not talking of problems that require immediate intervention," he added.
Turkey's treasury undersecretary Selcuk Demiralp, meanwhile, stressed Ankara's determination to keep to the stand-by deal, which was hammered out in December 1999 and aims to principally reduce Turkey's chronic inflation.
Inflation for 2000 stood at 39 percent for consumer prices and 32.7 percent for wholesale prices, well above its year-end targets of 25 percent for consumer prices and 20 percent for wholesale prices. But Ankara has said that it will not revise its targets for 2001 — 12 percent for consumer prices and 10 percent for wholesale prices — and will instead implement tighter economic measures. —(AFP)
© Agence France Presse 2000
© 2001 Mena Report (www.menareport.com)
