The International Monetary Fund's public comments on how Turkey should administer its anti-inflation program is causing friction with the government.
Shrugging off IMF suggestions, Prime Minister Bulent Ecevit said the state alone should determine Turkey's economic, financial and social policies.
``No international institution has right to assume the role of the state or society," Ecevit was quoted as saying by the semi-official Anatolian news agency while small-scale protests against the IMF were staged in various parts of the country.
``At the same time, international institutions should not attempt to dictate wage and income policies to us," Ecevit said. "We're on the way towards settling these policies through a societal reconciliation between workers and employers.
``International institutions from which we expect support should mind the macroeconomic balances we've agreed on, instead of forcing policies and solutions upon us."
Visiting IMF official Carlo Cottarelli had said Turkey should comply with inflation targets in wage and price adjustments, and he warned it against indexing wage hikes to past inflation. At a Sunday meeting in Antalya, Cottarelli also said growth could be compromised in the short term to achieve inflation targets and restrain current account deficits and called for fine-tuning to cool off the economy.
A step in that direction was taken over the weekend when the Central Bank raised a fund cut on consumer loans to 8 percent from 3 percent. The stock of consumer loans has risen by 152 percent to TL 5.3 quadrillion since the beginning of the year, which is viewed as a major drive behind the buoyant economic growth.
Turkey posted a strong gross national product (GNP) growth of 4.3 percent in the first half of this year, suggesting that the government's year-end projection of 5.5 percent could be exceeded.
"Our economic growth rate is expected to reach 6 percent this year ... which seems to have begun worrying international finance circles, including the IMF," Ecevit said. "These circles are arguing that such high growth may well disrupt the stabilization process. Actually, it's a result of the extraordinary internal dynamism of Turkish society."
The IMF is worried that the overheating in the economy could create inflationary pressures and dangerously widen current account deficits.
Ecevit also said the government was watching oil prices. "The petroleum-exporting countries gave hope that they would curb prices towards the end of the month, in the face of a worldwide reaction."
The IMF chief had reportedly warned of a loss of tax on oil, which the government has been slashing in order to avoid inflationary pressures stemming from the oil price surge.
Asked whether the government was preparing to fine-tune the economy, Ecevit said: "The IMF chief is responsible for expressing his own views and suggestions. But these policies are finalized by the state together with the society. We are continuously checking the pulse of the economy. The issue is on the government agenda." –(Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)
