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    Turkish gov't has constructive attitude towards IMF deal- minister

    HotNewsTurkey with wires
    30.10.2008 - 11:56 | Son Güncelleme:

    Turkish Economy Minister Mehmet Simsek said on Thursday the government had a "constructive" attitude towards a precautionary stand-by deal with the International Monetary Fund (IMF) as an anchor, although it was not in need of their funds at the moment. (UPDATED)

    "Turkey is constructive about a possible deal to anchor the economy and a program may be agreed if differences with the IMF can be overcome," Simsek said at a conference in Istanbul adding that Turkey is continuing talks with the IMF on a precautionary stand-by agreement.

     

    Turkey's previous $10 billion IMF stand-by deal -- which stipulated conditions related to loans -- expired in May and an IMF team,

    led by Lorenzo Giorgianni, had been in Ankara for post-program monitoring and talks on a possible new deal since mid-October.

     

    Separately, a statement from the Treasury in Simsek's name said the delegation had completed talks, focused on Turkey's macro-economic outlook, and left the country on Wednesday.

     

    It said agreement was reached that the Turkish economy was more resistant to shocks.

     

    "Sustaining fiscal discipline, cautious monetary policy, active liquidity management and structural reforms to maintain improvements in private financing will be important in limiting the impact of global developments on Turkey," it said.

     

    There was no mention in the statement of a possible precautionary stand-by deal which will enable Ankara to gain access to IMF credit during times of difficulty.

     

    IMF WARNS FOR RETRENCHMENT OF INFLOWS
    The IMF said that the Turkish economy was more resilient than in the past but warned that it would be unavoidably affected by the retrenchment of inflows to emerging markets.

     

    The discussions were held against the backdrop of heightened risk aversion and financial market turmoil in emerging markets and advanced countries alike, the IMF said in a statement on Thursday.

     

    The IMF said the mission focused on the implications of global de-leveraging for the Turkish economy and on the appropriate policy responses to minimize disruptive effects.

     

    "The Turkish economy is more resilient today than in the past, but will unavoidably be affected by the retrenchment of inflows to emerging market countries," Giorgianni said.

     

    "Buffers in bank and public balance sheets, the flexible exchange rate and greater diversification of export markets have increased Turkey's ability to cope with shocks. However, its dependence on external financing exposes the economy to the effects of the global credit crunch," he added.

     

    He said Turkey's monetary policy should continue to aim to bring inflation down to target, and added that central bank's recent moves to enhance its liquidity management toolkit was welcome.

     

    PM HAD HINTED

    Prime Minister Tayyip Erdogan hinted on Tuesday the government may not sign a new loan accord if the global lender exerted excessive constraints on budget spending, tax rates, economic growth and investments.

     

    Business leaders have called on the government to secure another loan deal to help limit the fallout from the global financial crisis that has already forced Ukraine, Iceland and Hungary to seek IMF help.

     

    "If the differences between us (and the IMF) can be overcome a program could come onto the agenda," Reuters quoted Simsek as saying.

     

    Turkish markets have tumbled this year, with the main share index losing more than half its value, while the lira has weakened as much as a third against the dollar, heightening market calls for action to support the sharply slowing economy.
     

     

     

     

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