Potential IMF agreement unrelated to upcoming IMF/WB meetings

Turkish media have been reporting that Turkey and the IMF would be likely to finalize an agreement before the commencement of the official meetings which will take place in İstanbul between Oct. 6 and 7.

Many believe the Annual Meetings, which will be preceded by the Sept. 24-25 summit of 20 advanced and emerging market economies in Pittsburg, will be pivotal in setting out a strategy for the aftermath of the worst crisis to hit the global economy since the Great Depression of the 1930s. The IMF has been quick to point out that “now is no time to relax.”

The Turkish media have surmised that Turkey will use the meetings as an opportunity to showcase a new agreement with the IMF.

According to IMF Senior Resident Representative Hossein Samiei, who attended the meeting on Wednesday, there will not even be a technical team -- required in order to finalize any agreement -- accompanying officials at the event. “The conclusion of the discussions will require discussion between the technical team and the authorities. And the technical team is not going to be attending the summit.”

Questioned by the press about the state of Turkey/IMF negotiations, Atkinson said: “The IMF team that works on Turkey is in contact with the authorities. It has been for a long time. There is a strong partnership. These discussions go on … these discussions will just continue at an appropriate pace.”

But despite the absence of a technical IMF team in Turkey, Atkinson was quick to point out that this did not preclude the possibility of negotiations taking place nor in noting that logistically there was nothing preventing a team from going out, either before, during or after the event to finalize any agreement.

“It's been possible for us to do these sorts of things [sending a technical team to finalize negotiations],” Atkinson said. “It's been possible last week, next week, this week, last month, next month, six months ago. The point is not about logistics; the point is that discussions are ongoing. I think there is a lot of agreement. I think the key thing for Turkey will be the policies that the Turkish government puts in place.”

Meetings to focus on international recovery and governance

IMF officials have been firm in insisting that the İstanbul Annual Meetings will be about working towards consensus on how to confront the economic crisis. IMF Managing Director Dominique Strauss-Kahn emphasized that the recovery will be sluggish and that a jobless recovery remains a risk. “I am concerned about the social and economic costs of high unemployment, which will persist even as financial markets and output stabilizes,” he said.

First Deputy Managing Director John Lipsky recently posted a statement on the fund's blog, saying: “Positive growth prospects for the coming year rest on the assumed implementation of a set of substantial policy actions and on private sector follow-through.”

At last week's G20 meeting in London policymakers expressed similar concerns and recommitted themselves to working towards resolving the crisis. In an interview with Today's Zaman, Atkinson responded to questions about how the meetings would be different from previous ones. “I think the time is different, a time where global cooperation is extremely important to support a recovery in the world economy and to stop the increase in unemployment; to provide more jobs and raising living standards. And we have seen and demonstrated in the last few months that global leaders working together can really make a difference to the lives of ordinary people.”

She noted that the International Monetary and Financial Committee (IMFC) -- the IMF's governing council at a ministerial level -- will issue a communiqué on Sunday, Oct. 4, outlining what they see needs to be done by the world economy and the IMF. Many of the proposals and blueprints for discussion and implementation at the İstanbul Annual Meetings are expected to be fleshed out at the G20 meeting this month in Pittsburg.

“I am sure there will be discussions about sustaining economic recovery, maintaining government support until the recovery is firmly under way,” Atkinson said continuing to outline three forecasts of events at the summit: “I think there will be clear steps on what governments around the world should take care to continue to support the economies. Second, I think there will be agreement on the importance in strengthening financial systems to avoid excessive risk taking and a re-run of the crisis. Third, I expect there will be discussion of the global or the new sources of growth, let's say. How the global economy will look and how the global governance will look.”

In recent weeks there have been a number of signs that the economy is recovering, but nonetheless there is general consensus that things remain and will remain fragile for some time. The recent commitment made at the G20 summit to continue with stimulus and not give in to temptations to rein in spending is one such example.

Atkinson suggested that growth would look different than in the past because the global economy will change as “demand shifts from the public sector to the private sector across the world, as demand shifts from the US consumer to more domestic demand in emerging market economies, especially big emerging market economies in Asia.”

Many commentators have surmised that global governance and regulation of the financial system will also take center stage in negotiations.