Turkish minister meets senior IMF official, says loan talks to continue

"There are issues that still need to be discussed," Babacan said in the southwestern resort of Bodrum after talks with IMF deputy managing director John Lipsky, Anatolia news agency reported.

"We will continue to work on those issues in Ankara and Mr. Lipsky in Washington ... Our contacts will continue in the coming weeks," he said.

Turkey has been negotiating with the IMF for a new three-year stand-by deal since a 10-billion-dollar program expired in May 2008.

There have been doubts as to whether Turkey is committed to a new deal, with Prime Minister Tayyip Erdogan insisting that an IMF loan is not imperative for the Turkish economy.

Media reports suggest there is no cabinet consensus on an IMF accord, which the business community says would boost investor confidence in the emerging market economy as it strives to weather the global economic crisis.

Erdogan last week said Ankara would not sign a deal that would be against Turkeys interests and slammed what he called political demands from the IMF.

Speaking at a business gathering in Bodrum earlier Friday, Lipsky said there were indicators that "suggest that the Turkish economy may be on the verge of recovery.

"In line with recent global developments, some hopeful signs are visible on the economic horizon," Lipsky told the Turkish Industrialists and Businessmen’s Association, according to a text made available to the media.

He highlighted the banking sectors "strong capitalization" and "robust profits," a sharp rebound in consumer confidence and improved investor sentiment toward emerging markets.

He also noted that the large corporations in the country had "held up fairly well" because they had little debt, while declines in manufacturing and employment had begun to be reversed.

He warned however that "the rising fiscal deficit and weakening loan quality could -- if not addressed forcefully -- cloud the growth outlook, including by curtailing banks ability to extend credit."

Lipsky did not mention the status of the IMF loan discussions.

IMF spokeswoman Caroline Atkinson said Wednesday in Washington that the Fund was continuing talks with Turkish officials to determine whether they will seek aid.