Turkish government may knock at Fed's door for financial support

Tayyip Erdogan could appeal for financial resources from the Fed if the IMF continues its demands of cuts in spending; a move the government is reluctant to do ahead of the local elections in March 2009.

 

"Turkey has a young population, so that it has to continue its growth path. What we are going to ask from the IMF is financial support to our mid-term program instead of pushing for new conditions," Referans quoted Erdogan as saying in a meeting with bank executives on Friday.

 

Turkey's 10-billion dollar stand-by agreement with the IMF expired in May and the government is yet to decide on the future shape of the relations with the IMF amid global turmoil.

 

Turkish officials had said the main sticking point with the IMF is the level of spending for local administrations.

 

MEETING WITH BUSH

Erdogan will travel to Washington to attend a 'working reception' to be hosted by U.S. President George W. Bush, the Anatolian Agency reported.

 

Erdogan told bank executives that he would also meet with German Chancellor Angela Merkel after Bush and ask them to help Turkey in its bid to use Fed funds, Referans also said.

 

Erdogan is also likely to meet Fed Chairman Ben Bernanke during a 3-day U.S. visit on Nov. 13-15. Economy Minister Mehmet Simsek would visit Washington ahead of the G20 meetings.

 

Deputy Prime Minister Nazim Ekren and Undersecretary of the Turkish Treasury Ibrahim Canakci will accompany Erdogan and Simsek.

 

The Fed had provided a total of around $120 billion to Brazil, Mexico, South Korea and Singapore through swap line mechanisms.

 

Economists voiced some concerns about Fed loans; in particular, that this swap line mechanism provides short term financing and that this would not be enough for Turkey amid the growing global crisis.

 

They added Turkey needs longer term financing and should be supported with an IMF agreement. Some of them cited political concerns as well, Referans reported.

 

An economist said the IMF is linked to the U.S. government while the Fed is completely managed by the Washington administration. "What would you do if you get a loan from the Fed and then in February or March, newly sworn-in President Obama brings the Armenian claims to the agenda?" Referans quoted an economist as saying.