[stop-imf] IMF to Turkey: Stick to Program, Irrespective of US

[Robert Weissman]

Excerpted from:
World Bank Press Review: Headlines for Wednesday, March 5, 2003

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Turkish Gold: Ankara Needs to Stick to its IMF Program Anyway
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The possible loss of a $24 billion package of US grants and soft loans,
intended to compensate Turkey for the economic fallout from an Iraq war
that is all but certain to go ahead anyway, could be a hammer blow to its
recovering economy, reports the Financial Times.

Under IMF supervision, Turkey has for two years been introducing
structural reforms and has started a slow but visible return to
sustainable growth after a 10 percent contraction in national output in
2001, the worst recession since 1945. The new government of the Justice
and Development party (AKP), elected last November, inherited and endorsed
the IMF program, which is underpinned by $16 billion in loans.

The government has damaged Turkey's prospects by taking its eye off the
reform ball. Its attention wandered to the pot of US gold it evidently
hoped would not only cover Turkey's financing shortfall this year, but
allow it to avoid painful budget cuts.

Turkey may well change its stance on US troops and get the attached aid
package. That would help it restructure its debt. But, whether it does or
not, the government must stick to the IMF program. It is not just an
austerity package but a series of reforms that could lay the foundation
for the more prosperous and just country Erdogan has promised.

Meanwhile, AFP reports the IMF said Tuesday its aid to Turkey was
unconnected with a US offer to provide massive assistance if the country
let US troops on its soil.

"We do not see a linkage," IMF spokesman Thomas Dawson told a news
conference, as the IMF and Turkey held talks in Ankara over the release of
a $1.6 billion loan installment.

The installment, part of a $16 billion IMF program to help Turkey overcome
a financial crisis, can only be unlocked after the IMF has reviewed and
approved Turkey's performance.  The New York Times  also reports.