Turkish authorities and the recent International Monetary Fund (IMF) mission to Ankara have reached agreement on all the key elements of a Letter of Intent for the fourth economic performance review under the three-year stand by credit arrangement.
While some details will need to be finalized over the coming week, the draft Letter of Intent embodies commitments consistent with the government's objectives of debt reduction, disinflation, and sustainable rapid growth.
These commitments were highlighted in the Prime Minister Abdullah Gul's March 3 statement on economic policies, and include a public sector primary surplus of 6.5 percent of GNP for 2003 and the medium term, no fiscal amnesties or generalized restructurings of arrears, prompt passage of direct tax reform, a phased plan to resolve redundant positions in state enterprises, and actions to strengthen the independence of the banking supervision agency.
The IMF recommends that to achieve its economic goals, the government needs to implement the agreed policies strictly. The first step is to complete the prior actions for this review. These relate to passage of the 2003 budget, and actions on direct tax reform, resolution of redundant positions in state enterprises, and privatization.
Once the remaining details have been finalized and the prior actions met, the IMF Executive Board could meet on the fourth review in the first half of April.
The stand-by credit for Turkey was approved in 2001, totaling $16 billion. This is the third major aid program approved for Ankara in under two years. The credit was awarded in a bid to support Turkey's new three-year economic reform program, for 2001-2004. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
