Turkey says IMF made unacceptable demands, not end of world if no deal

Erdogan and IMF officials have been continuing talks during the World Economic Forum (WEF) in Davos. Both Erdogan and IMF First Deputy Managing Director John Lipsky earlier said that progress has been achieved in the talks and expressed their hope on signing an agreement. 

 

A 10-day suspension was given in the talks on a new deal and they are expected to continue in a week, Erdogan added. He did not elaborate which demand made by the IMF had caused the suspension.

 

An IMF delegation completed their 12-day visit to Turkey on Monday. Both sides stress that consensus was reached on many issues; however, according to media reports, disagreements arose over mid-and long-term structural reforms and public spending.Â

 

Erdogan said he hopes to cut a deal with the IMF in 2009 but it will not be the end of the world if they fail to do so.

 

"If we reach an agreement with the IMF for 2009 it will make an easier time of it, and if we do not reach an agreement it is not the end of the world. Our treasury has made plans in the event that there is no agreement with the IMF," he told reporters.

 

Referans business daily reported on Thursday that the IMF had agreed to reduce the primary surplus target to below 3 percent but demanded a larger cut in public spending due to the deterioration of the government budget in 2008.

 

Turkey’s previous three-year $10 billion standby loan deal expired in May. The new agreement is expected to be for 18-24 months including a financial support of $20-25 billion.

 

Erdal Saglam, Hurriyet daily columnist, told the broadcaster CNBC-e that Erdogan's conflicting remarks have created confusion. "He sounded more optimistic in the morning. Now he speaks differently. This creates confusion," Saglam added.

 

FRUITFUL TALKS

In his earlier statement, Erdogan said his meeting with IMF on Wednesday was extremely fruitful.

 

"We have seen that there is a positive approach toward deal," Erdogan told reporters on Thursday, adding the comprehensive talks with the IMF would continue.

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The IMF has been hopeful that the outcome would be positive, Lipsky also told reporters. "We are doing very fine," he told broadcaster CNBC-e, and added the sides are holding "broad discussions".

 

The Turkish prime minister held a two-hour meeting with Lipsky in Davos on Wednesday on the loan talks between the country and the Fund.

 

Turkey and the IMF have reached an important phase in the new loan talks, Economy Minister Mehmet Simsek earlier said. "There is no definite position as yet; the talks will continue," Simsek was quoted by TV channels as saying in Davos.

 

 

 

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