Government under suppression on IMF issue

The bureaucracy has also become involved in the dispute, urging the government to take action and sign a standby deal with the IMF.

Some economy officials have recently underlined that Turkey is desperately in need of a stand-by deal amidst the crisis. They estimate that Turkey could be offered a $12 billion loan from the fund as part of the deal, which could ease problems greatly.

However, the government is reluctant to sign any deals with the fund before the local elections come to a conclusion.

State Minister Mehmet ?im?ek recently declared that they will focus on two choices: either to sign a precautionary stand-by deal, or to follow post-program monitoring. Officials, however, repeatedly stress that a regular standby deal should be signed as soon as possible. ?im?ek noted that Turkey does not need IMF loans, underlining that they already owe $9.4 billion to the fund. "We continue our relations with the IMF in technical terms," he said.

The private sector is also interested in the government's decision about the IMF. Experts from the IMF began post-program talks in Turkey last week. An IMF delegation, headed by Turkey mission chief Lorenzo Giorgianni, began talks with Turkish economy officials at the Treasury Undersecretariat in Ankara with post-program monitoring on the agenda. The IMF delegation met with the Turkish Industrialists and Businessmen's Association (TÜS?AD) and the Turkish Banks Association (TBB), who have repeatedly called for a deal with the IMF; however, they did not meet with the Turkish Exporters' Assembly (T?M) or the Independent Industrialists and Businessmen's Association (MÜS?AD), with whom they have met with during previous visits.

The Turkish Union of Chambers and Commodity Exchanges (TOBB) has criticized the call by TÜS?AD for the government to strike a new deal with the IMF in an attempt to ensure confidence in the economy. "It is very offensive if I have to take orders from others. For stability, Turkey needs not cooperation with foreign institutions but a strong economy and democracy," said Rifat Hisarc?kl?o?lu, the head of TOBB, pointing to the IMF's involvement in monetary and fiscal policies.

The IMF delegation is expected to stay in Turkey for about a month and will work only on post-program monitoring this week and is to focus on detailed technical studies on a potential precautionary standby deal during the rest of its stay. Turkish authorities and IMF experts will discuss a report prepared by Turkey in August, as well as the IMF's views. The IMF delegation is expected to gather information about medium-term projections. If the sides come to a final decision, Turkey and the IMF delegation will prepare a report to be presented to the IMF management.

Turkey has taken 30.6 billion of special drawing rights (SDR) -- 1 SDR is currently close to $1.5 -- from the IMF since 1958. Ninety-two percent of this is a result of the last three arrangements. The biggest single amount of SDR taken was $11.9 billion after the 2001 crisis. Turkey's debts to the fund had declined to $9.4 billion by the end of September of this year from $23.5 billion in 2002. Turkey will be able to tap into $8.8 billion of financial support from the fund as a result of a recent decision by the organization to increase borrowing limits to five times the capital subscription quota for members with developing economies. This is to counter the difficult economic climate brought about by the global financial crisis.

If Turkey signs a precautionary standby deal it will be able to take loans whenever it feels constrained financially. If the post-program monitoring is approved, then an IMF delegation will prepare reports on the condition of the Turkish economy, visiting the country a few times a year.

No need for IMF money, CB governor says

The governor of the Turkish Central Bank said yesterday that there is a serious dollar liquidity problem in the Turkish markets and that it is urgent to take measures, but he ruled out a stand-by deal with the International Monetary Fund (IMF). "Turkey doesn't really need resources from the IMF at the current stage," said the governor, Durmu? Y?lmaz.

Speaking yesterday in the Turkish Republic of Northern Cyprus (KKTC) in a meeting to introduce the new lira banknotes that will replace the YTL notes at the beginning of 2009, Y?lmaz answered questions from the press regarding recent monetary issues.

"There are ambiguities about which we shall meet in the days ahead, and therefore we see it useful to introduce regulations to inspire confidence in the markets," he said. Beyond this, making a determination regarding the IMF is a political decision, he said.

He focused on a recent sensational issue: the concern over what will happen to foreign exchange rates. The dollar surged last week against the lira from levels around 1.3 to more than 1.7, and the central bank signaled that it was ready to intervene to cool the markets.

But Y?lmaz was not so definite in his remarks about the possible course of action if the currency rates continue to rise. He said the rates' fluctuation will be determined largely by the ongoing financial crisis. He recommended not getting into debt in dollars for those who don't have revenue in dollars.

As a response to a reporter's question about the level to which the dollar will rise, he said no central bank governor ever states his personal predictions on exchange rates. "The current system is the floating exchange rate system, and as its name implies, the rates are determined freely by the market," he said. İstanbul Today's Zaman with wires