Turkey can move forward without IMF, says prime minister
Posted by meb at February 11th, 2009
Prime Minister Recep Tayyip Erdoğan has said that his government will not be signing any stand-by agreement with the International Monetary Fund (IMF) unless the conditions of the deal guarantee the interests of the country.
“If no agreement arises from negotiations, we have $8 billion in debt left with the IMF, and that is all. … We shall continue on our way with our own resources and with our own options by repaying all the remaining debt,” Erdoğan said. Erdoğan recalled that Turkey’s debts to the IMF totaled $23.5 billion when his government took over the country’s administration in 2002 and that this figure has now dropped to just $8 billion.
Speaking on Monday at an awards ceremony for the “4th Successful Small and Medium-Sized Enterprise Competition,” organized by the İstanbul Chamber of Commerce (İTO), Agreements between countries and the IMF depend on mutual interests, he said, stressing that if the IMF imposes an agreement or protocol that may push Turkey into fresh trouble, the country will not bow down to such a deal.
Talks for Turkey’s 20th stand-by deal with the IMF started in early January and were suspended late in the month during the Davos summit when Erdoğan rejected a number of new conditions put forward by the IMF on the grounds that these new conditions were in conflict with Turkey’s interests and that they may create new problems.
The IMF was established to provide financial relief for countries in need, particularly in times of crisis, he asserted, adding: “I explained our attitude on this matter precisely to their top managers, too. Most recently, I once again repeated the same thing to its number-two man during the Davos summit. I said, ‘Let’s sign the deal as it is. If you bring new demands and conditions before us at every meeting, sorry, but we will not be signing any deal with you.’”
Erdoğan also spoke about the measures his government has taken so far to cope with the ongoing global financial crisis. The government took a vigilant stance from the first moment they started to see signs of an approaching crisis, he said, adding that 30 measures have been introduced to extend a hand to the businesses and households facing financial trouble. Attempts to provide shelter for exporters, manufacturers, small companies and workers against the worst of the crisis have helped preserve market confidence to a certain extent, he emphasized, adding, “As a result of these measures, we injected YTL 10 billion into the markets from the central budget just in the last six months of 2008.”
Meanwhile, the British daily Financial Times claimed yesterday that international pressure on the Turkish government to sign a deal with the IMF immediately was intensifying. “Analysts warned that Turkey’s government risks losing credibility with investors and missing the best chance in years to tame endemically high inflation and borrowing costs if it backs away from talks with the International Monetary Fund (IMF),” the Financial Times wrote on Tuesday. “It has not yet been invited to return, and ministers have made it clear talks will not resume until big differences are resolved,” the daily explained. Investors have long been counting on Turkey to secure at least $20 billion in IMF funding, the daily asserted, adding that many of these investors now wonder if Erdoğan will commit to a deal requiring unpopular fiscal tightening.
Apparently written from the perspective of the IMF and almost totally disregarding Turkey’s stated concerns, the article claimed that if Turkey drags its feet to sign the deal, its economy will be defenseless against any global trouble. Without an IMF anchor, Turkey will miss a rarely found chance for lowering its inflation and interest rates to single-digit levels, it said, citing Ahmet Akarlı, a Goldman Sachs analyst.
However, not everyone agrees with this assessment. Nobel Prize-winning economist Joseph Stiglitz, for example, said last week that Turkey has to carefully consider its own situation and the global financial environment before signing a stand by deal with the IMF and that avoiding a deal would be a better option if the conditions presented by the IMF are in conflict with what the global and domestic situation requires. In an interview with the Anatolia news agency, he noted that existing stand-by models do not sufficiently cover the needs of countries.
source: Today’s Zaman
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