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    Turkey to invite IMF for post-program assessments

    Hurriyet English
    16.05.2008 - 12:16 | Son Güncelleme:

    Turkey plans to invite an IMF delegation to undertake final evaluations after the stand-by agreement expired on May 10, the economy minister said on Friday. He also touched on the issues of rising inflation and government- central bank relations. (UPDATED)

    Mehmet Simsek told the state-run Anatolian Agency that in order to start post-programme monitoring the IMF team doesn't have to come to Turkey. "This (start of post-programme monitoring) can be done by exchanging letters," he added.

    The Turkish government has yet to decide the future shape of relations with the IMF after it $10-billion IMF stand-by agreement expired on May 10.The government is facing increasing pressure over the delay from the investors, who see the Fund as a crucial anchor for Turkey's economy. The IMF has urged Turkey to make a speedy decision on future relations.

    "I am going to invite the IMF delegation for the final post-programme evaluations. This is required only for (IMF's) internal arrangements. The Fund monitors countries that accessed large amounts of its resources over a long period. After that if we, as the government, make a decision to continue with a precautionary stand-by than we will invite the IMF delegation separately," Simsek added.

    A precautionary stand-by arrangement allows a fair degree of IMF oversight of fiscal policy but it provides financing only in emergencies, unlike the expired agreement, where the $10 billion was guaranteed.

    Turkey has borrowed $45.8 billion from the IMF since the financial crisis in 2001 and was the fund's last major borrower from a string of crises in emerging economies including Brazil and Argentina, which repaid their IMF debt ahead of schedule.

    Simsek, touching on the future of inflation in Turkey added, inflation figures would go down to single digits in the medium term.

    "Rising inflation figures in Turkey are not due to monetary and fiscal policies. Inflation in Turkey is being affected by rising food and energy prices," Simsek noted.

    The Turkish Central Bank (CB) raised its short term interest rates by 50 basis points on Friday, the first increase in 22 months, due to inflationary pressures. The CB decision raised the overnight borrowing rate to 15.75 percent from 15.25 percent; and lending rate to 19.75 percent from 19.25 percent.

    Also speaking on the Turkish Central Bank, Simsek said "the central bank has the ability to make independent decisions." "I believe in the independence of the central bank and the stability of prices," Simsek noted.
           
    "We have not assigned any task on Turkey's economic growth to the central bank. The central bank's primary goal is to maintain price stability," Simsek said.
           
    In regard to inflation targeting, Simsek said the floating exchange rates that Turkey is implementing is an important system. "We are not thinking about ending the floating exchange rates system as it is vital in absorbing global economic shocks," Simsek also said.

    Photo: AA

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