IMF chief says Turkey deal soon

The International Monetary Fund, or IMF, chief said Thursday that he expected the fund and the Turkish government to reach a fresh standby agreement within weeks to help Turkey's economy.

"I believe in the coming weeks we will find an agreement," IMF Managing Director Dominique Strauss-Kahn said, speaking at the National Press Club nearly a week before the annual spring meetings of the IMF and the World Bank.

He said in recent years Turkey had received large capital inflows but that the sources have now dried up in light of the global crisis.

Turkey and the IMF have been discussing the terms of a new standby deal since late last year, but the March 29 local elections disrupted the talks. Strauss-Kahn confirmed that elections "are not good times" for such deals, but said the negotiations had now resumed.

He said Turkey had a "strong and big economy" and a record of implementing successful IMF-backed economic programs over the past eight years.

He declined to comment on the size of the potential deal with Turkey.

The last arrangement with the IMF, backed by more than $10 billion in fund finances, expired successfully last May.

The global financial and economic crisis has hit Turkey's exports and worsened unemployment.

On Monday, the head of a top Turkish business group accused Prime Minister Recep Tayyip Erdoğan’s government of delaying necessary economic measures, including a deal with the IMF, because of the elections.

"The government seriously misjudges the severity of the economic crisis," said Arzuhan Doğan Yalçındağ, president of the board of the Turkish Industrialists' and Businessmen's Association, or TÜSİAD.

"Its reluctance to face up to realities and the expediency of local elections led it to postpone any serious effort to come up with an economic program," she said in Washington, D.C.

A series of IMF-backed programs helped Turkey recover from the 2001 crisis. Economy Minister Mehmet Şimşek is expected to hold talks with top IMF officials during the spring meetings next weekend.

Meanwhile, Turkey’s Deputy Prime Minister Nazım Ekren on Friday said he expected Turkey and the IMF to agree on a new loan accord "in a very short time." Ekren spoke in a televised interview on CNBC-e news channel.

Financial stress high in Turkey
A recent report by the International Monetary Fund, or IMF, shows Turkey as the economy most prone to "financial stress" emanating from developed economies.

The "World Economic Outlook" report, published Thursday, deals with stress levels in foreign exchange, stock and sovereign debt markets of emerging economies in one of its chapters. As a result of its calculations, the IMF said the "comovement of financial stress" between emerging and advanced economies is the highest in Turkey, followed by Chile. "Transmission of stress from Western Europe appears strongest during the current crisis," the report said, a phenomenon that explained why Turkey is affected so deeply.