Turkey needs fiscal measures even without IMF- finance minister

"We need fundamental measures. We in no way underestimate this crisis. This crisis is affecting Turkey's real economy and will continue to affect it," Simsek said in parliament.

 

"With or without the IMF, Turkey certainly must take measures for this year and for the medium term. This is a reality and we cannot avoid this in any way," he said.

 

His comments are likely to add further doubt to IMF loan talks, which were suspended in January due to differences over the level of government spending and fiscal reform steps.

 

As economy minister, Simsek was in charge of the talks with the IMF on a loan deal expected to be as much as $45 billion. He was appointed finance minister on May 1.

 

Turkey had submitted its proposals to the IMF including measures equivalent to 1 percent of its gross domestic product to limit the budget deficit.

 

Simsek said Turkey's proposals included 'very comprehensive structural reforms and more realistic macroeconomic assumptions.'

 

Prime Minister Tayyip Erdogan has said he would not accept the IMF demands to rein in spending, because the government fears this would exacerbate Turkey's economic downturn.

 

Fiscal austerity and high primary surpluses have been standard terms of IMF programs for emerging markets like Turkey.

 

Turkey's previous $10 billion IMF stand-by agreement expired in May 2008, and the discussions were for a new three-year stand-by.

 

"But evaluation of that program is probably continuing as there are no steps taken (by the IMF)," the minister said.

 

Turkey's budget deficit soared 268 percent in the first four months to 20.073 billion lira ($13.15 billion), putting at risk the official end-2009 budget deficit target of 48 billion lira.

 

Central Bank Governor Durmus Yilmaz said earlier this week that Turkey should prepare an alternative plan if it fails to conclude talks with the IMF, signaling that a deal might not happen.Â

 

Business groups have been clamoring for an IMF deal to shield the European Union candidate's export-driven economy, which is expected to shrink some 5 percent this year.