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    Erdal Saglam: Turkey's PM's about-face to sign an IMF deal

    Hürriyet Haber
    30.10.2008 - 12:00 | Son Güncelleme:

    Turkey's prime minister seems to have done a complete about-face to establish the foundations for an International Monetary Fund agreement.

    The first signs that suggest that Erdogan started to shift his ideas were his remarks, "We are not the enemy of the IMF," and, "The IMF should show a more understanding attitude towards us". He started to soften his stance towards the IMF saying "if they try to lower our growth rate" and "if they try to block our investments completely," after an earlier harsh statement that "nobody can force us to 2 or 3 percent growth rates".

     

    This clearly shows that the government is progressing towards an IMF agreement...

     

    This all happened in the space of one week. Firstly he delivered messages to his supporters saying, "We will not allow the IMF to choke us;" then he shifted and returned to his true course - in the direction of an IMF deal.

     

    In any case, the IMF has not asked Turkey "to halt investments completely", or "greatly reduce the growth rate". The IMF only asked for a cut to excessive spending in order to be more flexible to necessary spending.

     

    If you ask what will happen after this; all is very clear... Things will continue as they have before.

     

    In other words, maybe the growth rate will not be recorded 2 or 3 percent in budget, but for example, it might be determined at 3.5 or 4 percent; yet, we all know that this rate target is impossible to attain.

     

    In my opinion, Turkey achieving a growth rate of 2 percent growth rate in 2009 would be a huge success.

     

    Since this rate target would not be formally announced, the prime minister would say, "We negotiated very well, the growth rate will not decline to the 2 percent level." But, the reality would be a completely different.

     

    Previous governments also tried similar methods. At first they appeared to oppose the IMF, but later they also signed an agreement with the fund. Erdogan has played this game better his predecessors, increasing his popularity, despite a major turn around in his thinking.

     

    SOLE IMF DEAL IS NOT SUFFICIENT ANYMORE

    In my opinion, we have already moved beyond a time in which an IMF deal would solve everything.

     

    The IMF deal has perhaps become a pre-condition, but it is no longer solely sufficient for maintaining stability.

     

    Of course, it is important to see the level of funding the government will receive from the IMF and where it will be spent in order to reach this conclusion. From my point of view, the government still needs to do more. The Justice and Development Party government did not take the necessary steps even when we warned that the reforms were being hindered, and the economy was being placed on the back-burner.

     

    Then the crisis become obvious, even before the latest IMF deal expired in May, we warned the government "to develop their own economic program or sign a new deal with the IMF and not leave economy without an anchor with the crisis looming". But we failed to make them listen.

     

    The government is now negotiating with the IMF to correct its mistake and lessen the political affects.

     

    The cost of the government delay has grown and entire nation prepares to pay this price.

     

    As the government is bargaining for a deal, it should not accept a loan of less than $20 billion and this should be used for the real sector.

     

    As Rifat Hisarciklioglu, the chair of Turkish Union of Chambers and Commodity Exchanges (TOBB) said, high growth in the last five or six years in the private sector was made possible by investing with the foreign loans they obtained.

     

    There would be no need to IMF deal if the government had formulated a new program one or two years before, and an IMF agreement would have been sufficient had it been signed six months ago when it was clear that the crisis was on the horizon. Now, an IMF agreement alone will not be enough.

     

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