IMF calls on Turkey to cut spending by 6b lira
IMF calls on Turkey to cut spending by 6b lira
Ankara: The International Monetary Fund has asked Turkey to deepen its budget spending cuts to 6 billion lira (Dh13.61b) from a planned 3.6 billion lira as part of talks on a major loan accord, the Zaman newspaper said yesterday.
Talks between the IMF and Turkey were suspended this week for 10 days in an attempt to clear remaining obstacles to a deal, with Turkey's government striving to bolster investor confidence and protect its economy from the global financial crisis.
Turkish business leaders and investors urgently want a stand-by deal to stabilise the economy after a previous $10 billion (Dh36.73b) loan deal expired in May.
The government announced last December it would cut total budget spending planned for 2009 as the financial crisis deepened, but the IMF wants this cut to be deeper.
The global funding body has also asked for an increase in value-added tax and special consumption tax to boost revenues but the Turkish government did not accept these demands, the paper said in an unsourced report.
The IMF opposes the government plan to cut electricity and natural gas prices. The paper said another point of disagreement was the level of loans. While the government has asked for loans above $15 to $16 billion, the IMF does not agree.
The global lender also asked the Turkish government to cut its 2009 economic growth rate target to 1.5 per cent, from the current 4 per cent, the paper said.
Many economists say the four per cent growth target is impossible due to the global economic crisis, which sharply cut consumer demand and exports. Ratings agency Moody's expects the Turkish economy to contract 0.8 per cent in 2009 after years of stellar growth.
Economists have said they still expect Turkey to conclude talks in the near future as it could not afford to be without the support of the IMF during the global crisis. Turkey recovered from a crisis in 2001 with the help of huge IMF bail-out packages. Turkey's outstanding debt to the IMF is $8.5 billion, the latest Treasury data shows.
