The IMF demands from Turkey measures equal to the investment budget

What does Turkey want?:

In the past an IMF program was perceived by global investors as "Things are improving in Turkey, it is time to invest" and this triggered fund inflows. But today, not only Turkey, but the world is in crisis, so it is difficult to see new fund inflows to the country. Therefore Turkey does not want to shrink the economy any further than is already happening.

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What does the IMF offer?:

The queue at the door of the IMF lengthened while Turkey delayed cutting a deal. The IMF needs more than $100 billion to finance the existing demands. So it does not want to give loans to finance the Turkish economy's rapid growth. The IMF does not say outright that "Turkey should dwindle", but putting limits on the loan and the credit means just that.

 

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Under this framework, talks on the 2009 budget are still underway. The IMF, who previously demanded a half point increase in the primary surplus ratio, now asks for savings of 7-8 percent of the budget as a result of the deepening global crisis.

 

Of course the total from this saving would not come from the budget, but in order to give you an opinion, let me tell you this: The additional precautionary budget that the IMF is considering for 2009 is equal to the investment allocation.

 

It is not possible to cuts from interest rate payments and staff costs in public spending. The fund transfers to education, health and social security are untouchable. So investments are what remain.

 

This is one of the reasons that the prime minister is having difficulties.

 

Early in this week Turkey was successful in cutting the IMF's additional restricting demands by half.

 

Therefore no major obstacle remains ahead of sealing a deal with the IMF.

 

 

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