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IMF loan agreement for Turkey: three year loan, estimated at ~$40 billion Conditions  Post a primary surplus target (excludes interest payments on government debt)  Curb rise in the 2009 budget deficit Erdogan has described the following conditions as ‘unacceptable’  Reduce government spending, implement fiscal austerity measures, make public pledges  Autonomy for the Revenues Administration (GİB) (tax administration)  Get rid of the ‘wealth amnesty’ program, which required less scrutiny of funds coming into Turkey *A Forbes piece quoted an unavailable Star newspaper article saying that the IMF wants Turkey to agree to fiscal measures worth 50 billion lira over the next two years as part of the deal, and to reduce government spending while increasing its revenue through tax hikes http://www.forbes.com/feeds/afx/2009/08/12/afx6768992.html

IMF statements “Talks between the International Monetary Fund and Turkey on a new loan accord are 'intensively' ongoing” IMF representative in Turkey Hossein Samiei 29 May http://www.forbes.com/feeds/afx/2009/05/29/afx6481058.html

“A mission is currently in the field and good progress is being made toward an agreement” IMF spokesman David Hawley 18 June http://www.hurriyet.com.tr/english/finance/10781799.asp?gid=244

Turkish statements “The Turkish economy has proven it has enough strength to surmount difficulties due to the ongoing global financial crisis without taking any loans from the International Monetary Fund (IMF)” Deputy AKP chairman Nurettin Canikli 22 June http://www.seeurope.net/?q=node/17627

“Turkey and the International Monetary Fund are continuing negotiations on a new loan accord and there is no reason to be pessimistic about a deal” Central Bank Governor Durmus Yilmaz 29 July http://www.forbes.com/feeds/afx/2009/07/29/afx6712871.html

“The IMF loans to Turkey should be directed to the Treasury to help it reduce its debt repayment load and leave more funds for the private sector to borrow” Central Bank Governor Durmus Yilmaz 3 July http://www.hurriyet.com.tr/english/finance/11551154.asp?scr=1

“We owe some $7.5 billion to the fund and could easily pay it off. We are not a slave [to the IMF]” Erdogan http://www.todayszaman.com/tz-web/detaylar.do? load=detay&link=178726&bolum=105

Timeline May 2008: Last three-year IMF deal with Turkey for $10 billion expired

January 2009: IMF sent delegation to Turkey to discuss a loan, talks broke down over IMF conditions

April 2009: Turkey and IMF agree in principle to restart loan talks after Erdogan spoke with IMF officials at the G20 in London

June 2009: IMF Executive Director Willy Kiekens visited Ankara to discuss the loan

9 July 2009: Erdogan met with Strauss-Kahn in L’Aquila and had a 15 minute meeting

29 July 2009: Talks between Turkish government and the International Monetary Fund, or IMF, are still going on, Turkish Central Bank Governor Durmuş Yılmaz said on Wednesday.

6-7 October 2009: IMF World Bank meeting in Istanbul

Note: Turkey currently owes the IMF over $7 billion, and a new deal with the IMF would allow payments to continue on schedule

Sources: http://www.todayszaman.com/tz-web/detaylar.do?load=detay&link=178726 Canikli: Turkey has proven it can do without IMF loans The Turkish economy has proven it has enough strength to surmount difficulties due to the ongoing global financial crisis without taking any loans from the International Monetary Fund (IMF), Nurettin Canikli, deputy chairman of the ruling Justice and Development Party's (AK Party) parliamentary group, has said.

“The government has done its best to preserve Turkey's national concerns thus far, having assessed the potential results of a stand-by deal with the fund well. We are breaking taboos and have now proven that Turkey can continue on its path without a loan deal with the IMF,” Canikli explained, speaking in Ankara on Sunday. According to the AK deputy chairman, the majority of people in Turkey believes that the best way to come out of financial bottlenecks is to take out loans from abroad; however, the government has shown that such an understanding is not in fact true.

Noting that talks on a possible stand-by deal with the IMF are still under way, he emphasized that Turkey is not obliged to sign the deal. "We have learned how to stand on our own two feet without being propped up by IMF aid. Many people have seen this fact, retaining confidence in the domestic market,” he said, adding that the fund needs to change its own policies and stop applying double standards toward certain economies, pointing to the fact that the fund has brought about a number of demands -- none of which has been deemed “acceptable.”

“Their latest demand was to revise our primary surplus target; however, doing so is impossible for the time being. We need to ease the burden on the capital market, but the fund is asking us to delay that,” he noted as he stressed that it would have made things worse had the government acquiesced to the fund's pressures.

Turkey's talks with the IMF on a stand-by deal were suspended in January due to disagreements over issues such as unregistered income, government spending and the Revenues Administration. They were again picked up at a recent G-20 meeting. Having spoken on the issue, Prime Minister Recep Tayyip Erdoğan said the fund's demands did not suit Turkey's intentions. “We owe some $7.5 billion to the fund and could easily pay it off. We are not a slave [to the IMF],” he added.

With regards to projections for the future of the economy, Canikli said the government has faith in Turkey's potential to come out of the crisis before many other countries. Enumerating two major points that the government has concentrated on while dealing with the crisis, he said one was to rejuvenate domestic demand while the other was to enhance local investment. “The government expects to keep the lights on at factories and to minimize unemployment, creating more demand with these two measures,” he explained. Canikli said he expected the Turkish economy to show signs of a nascent recovery starting from the final quarter of this year and that this positive atmosphere would continue through 2010.

Meanwhile, Small and Medium-Sized Enterprises Association (KOBİDER) Chairman Nurettin Özgenç has called on the government to not sign a stand-by deal with the IMF. Speaking in Adana on Sunday, Özgenç said KOBİDER does not want Turkey to be pulled into further debt, stressing that the country has been relatively less affected by the crisis. “Some still urge the government to sign the deal; however, they are, if not intentionally, adding to the current atmosphere of uncertainty by keeping the country's agenda busy with such demands,” he noted. http://www.hurriyet.com.tr/english/finance/11914139.asp?gid=236 Turkish bonds climb on IMF expectations ISTANBUL - Turkish bonds rose on Friday, posting the biggest weekly gain in almost 2 1/2 months as the Central Bank cut interest rates more than forecast and International Monetary Fund, or IMF, meetings fanned speculation a loan accord is close.

The advance in benchmark lira bonds pushed the average yield down 13 basis points to 12.11 percent in Istanbul, the most since the week ending April 10, according to an index of securities tracked by ABN Amro Holding.

IMF First Deputy Managing Director John Lipsky said after meeting Deputy Prime Minister Ali Babacan Friday that the two sides "had a very productive discussion" and would continue their meetings. The Central Bank cut its key interest rate on June 16 to 8.75 percent to support the economy, which shrank 6.2 percent in the fourth quarter.

"The possibility of an IMF deal is seen higher after Friday’s meeting because the statements on talks continuing on a technical basis and the convergence of views," said Barbaros Özüyılmaz, who helps manage the equivalent of $1.1 billion of Turkish assets at Alternatifbank in Istanbul. "The market is buying the possibility of a loan accord."

The two sides "had a productive discussion ... and found there is a great convergence of views about the near and medium-term challenges facing Turkey,"

Lipsky said after meeting Babacan in the southern resort of Bodrum. Talks will continue in the capital Ankara and in Washington, Babacan told reporters.

Bond yields have fallen from a high of 25.01 percent in October as the Central Bank slashed its main rate by 8 percentage points in eight months to cushion the economy from its first recession since 2001, ABN Amro’s index shows.

Turkey and the IMF have been talking about a possible new loan program of between $20 billion and $40 billion for more than a year. Progress has stalled since the IMF’s last visit to the country in January amid disagreement over the government’s spending plans and IMF demands to make the tax-collection agency more independent. Timothy Ash, head of emerging-market economics at Royal Bank of Scotland Group, wrote in a note Friday after meeting Turkish Treasury and Central Bank officials that he "did not get the sense that an IMF deal is close to being concluded."

Ash said he is "positive" on bonds and the lira, given "limited inflationary pressures" and the Central Bank’s willingness to cut rates further, "at least by another 75 basis points." http://www.todayszaman.com/tz-web/detaylar.do?load=detay&link=180475&bolum=105 İş Yatırım head sees no urgent necessity for loan from IMF Turkey should continue without signing a loan deal with the International Monetary Fund (IMF), İlhami Koç, director of İş Yatırım, a Turkish investment company, said on Thursday.

Speaking to reporters on the sidelines of a conference titled "Hidden Riches of the Eastern Mediterranean” in London, Koç said, "Our country must stand firm on its feet, and to this end, politicians should not bend to conditions imposed by the IMF but rather regulate the market in step with Turkey's own priorities." He underlined that this was the only way to get rid of the fund's sanctions.

Turkey's talks with the IMF on a stand-by deal were suspended in January due to disagreements over issues including unregistered income, government spending and the Revenues Administration (GİB). They were reinitiated at a recent G-20 meeting. Having spoken recently on the issue, Prime Minister Recep Tayyip Erdoğan said the fund's demands did not suit Turkey's intentions.

“If there was a global economic recovery, Turkey might not sign a deal with the IMF or might make a weaker agreement with the fund. But I believe that we will sign an agreement with stringent conditions with the IMF if things seem bad," Koç also said, adding that he hopes Turkey will not need an agreement with the IMF. On the issue of investments in foreign markets, Koç said İş Yatırım expected to expand to the Gulf region to get into the Islamic financial products market.

Bringing together more than 50 leading companies from Turkey, Israel, Greece and Romania, the Hidden Riches of the Eastern Mediterranean conference included discussion of some 100 new institutional investments. Established in 1996 as a subsidiary of İş Bankası, İş Yatırım offers investor products and services in domestic and international capital markets. The main shareholder of İş Yatırım is İş Bankası with a 63.7 percent share. In the first five months of year, the value of transactions generated by İş Yatırım was $15.5 million in stocks with a market share of 8.07 percent. http://www.todayszaman.com/tz-web/detaylar.do?load=detay&link=180611 Erdoğan urges IMF to make deal before September In L'Aquila to attend a G-8 summit, Prime Minister Recep Tayyip Erdoğan met with members of the press yesterday to discuss the content of his meeting with International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn on Thursday.

Erdoğan and Strauss-Kahn held a 15-minute meeting, and members of the press who were waiting for a statement after the talk yesterday left empty-handed. However, Erdoğan answered questions about the talk during a press conference on Friday. Turkey has been reluctant about striking a deal with the IMF despite difficult liquidity conditions in the country amid the ongoing global economic crisis on the grounds that the IMF has proposed "unacceptable conditions." Last month, Erdoğan said Turkey was very close to a deal with the IMF but that he was not sure if the IMF was also close to a deal.

The prime minister said yesterday that he asked the IMF head to speed up negotiations to reach a conclusion as soon as possible regarding both fiscal discipline and structural reforms. "We will be very glad if this can be achieved soon," Erdoğan said. He added that the Turkish government is definitely not in favor of postponing signing a deal with the IMF until this year's IMF-World Bank fall meeting, which will take place in Turkey on Sept. 28. "They also expressed their satisfaction with our suggestion," he noted. http://www.todayszaman.com/tz-web/detaylar.do?load=detay&link=180672 Turkey’s economy under pressure Turkey's economy is still dealing with the effects of the global recession, having seen export markets dry up and domestic demand weaken, though it has avoided a repeat of large-scale financial meltdowns of the past and is expected to return to growth in 2010. The World Bank and the International Monetary Fund (IMF) forecast that the Turkish economy would shrink by 5-5.5 percent this year, an estimate the government has come to accept, though until April some officials were still hoping that the country could avoid falling into recession and would post growth of 4 percent in 2009.

The Organization for Economic Cooperation and Development (OECD) was somewhat harsher in its latest predictions, forecasting a 5.9 percent contraction in a report issued on June 24. While saying the Turkish economy could rebound in 2010, posting growth of 2.6 percent thanks to interest rate cuts and tax relief measures for the private sector, the OECD warned that the government had to keep spending in check, with an IMF loan agreement assisting to lock in austerity measures.

"A new stand-by agreement with the IMF would also help by providing a reliable funding source and credible monitoring," the report said.

However, there is no certainty that any agreement with the international lender will be struck. Though Turkey broached the issue of a new loan with the IMF late last year, with a figure of up to $45 billion being discussed, there have been a number of sticking points that have prevented any deal being finalized.

In particular, the government does not want to have its hands tied regarding fiscal policy, rejecting IMF demands to implement a wider austerity program, or to create an autonomous tax administration, a move Prime Minister Recep Tayyip Erdoğan has described as unacceptable.

The government has been giving out mixed messages over the stand-by discussions with the IMF -- Erdoğan saying in mid-June that a stand-by arrangement is not essential for Turkey, though earlier in the month he said an agreement would be sealed by autumn at the latest.

On June 25, the deputy prime minister, Ali Babacan, who is also the state minister for the economy, said talks were continuing with the IMF, though the government was making preparations for two different scenarios, one taking into account reaching a loan agreement with the fund, and the other relying on other resources.

A number of Turkey's leading business groups, including the influential Turkish Industrialists and Businessmen's Association (TÜSİAD), have called for the government to finalize an agreement with the IMF, both to provide a cash injection into the economy and bolster confidence.

And confidence, along with liquidity, remains in short supply. Though the latest figures issued by the Turkish Statistics Institute (TurkStat) in mid-June show the unemployment rate has eased, falling from 16.1 percent in February to 15.8 percent in March, much of this improvement can be attributed to seasonal factors, with the agriculture sector soaking up some of the excess in the labor pool due to planting and harvesting requirements. Since mid-2008, the Turkish economy has shed around 1.2 million jobs, with a total of 3.7 million workers listed as unemployed.

Turkey's industrial sector has been especially hard hit by the crisis, with output and capacity utilization falling for each of the past nine months. Output figures for April, released at the beginning of June, showed production levels fell by 18.5 percent compared to the same month in 2008, though the rate of decline was slightly slower than for the previous month, prompting some analysts to suggest the crisis in the industrial sector was easing, aided by cuts in sales taxes put in place by the government in March.

Worst affected is the automotive sector, one of the Turkish economy's growth engines in the past and its leading industrial export earners. Vehicle production was down 59 percent in the first quarter of the year, with most major manufacturers halting assembly lines for periods over that time and into the second quarter.

Overall exports are also down, falling 39.97 percent in May and totaling just $35.8 billion for the first five months of the year, well off the performance of 2008 that saw Turkey send more than $120 billion of goods and services overseas.

There was some good news for Turkish exporters in the OECD's June 24 reports, with the organization saying that the European economy will be flat in 2009, an improvement on the expected 4.8 percent contraction this year. With Europe being Turkey's largest export market, representing around 50 percent of all overseas sales of goods and services, an end to the steep downturn in the eurozone will be seen as a hopeful development for Turkey.

While many of the cornerstones of the Turkish economy have been eroded by the crisis, the tourism sector has shown itself to be remarkably resilient. According to figures released by the Ministry of Culture and Tourism on June 23, some 7.37 million overseas visitors came to Turkey in the first five months of the year, just 0.7 percent down on the January to May period in 2008. With tourism being one of the largest foreign currency earners for Turkey, a solid performance in the peak summer season could help mitigate some of the effects of the recession. To try and stimulate the economy and restart the flow of money into the market, the Turkish Central Bank has instituted a series of cuts to its prime interest rates, the latest on June 16, which saw the bank's key borrowing and lending rates reduced to all time lows of 8.75 percent and 11.25 percent, respectively, though the bank struck a cautious note.

"Foreign demand continues to be weak and internal investment demand is regressing," the bank's Monetary Policy Committee (PPK) said in a statement announcing the most recent cuts. "We believe recovery in economic activity will take time, employment conditions will stay the same for a while and that inflation will remain low."

Hopes for a quick recovery of the Turkish economy will be linked in part to its major trading partners bouncing back from the effects of the global recession, as well as an increase in domestic demand. With only limited funds at its disposal and under pressure from the IMF to take a measured approach to spending, the Turkish government's room for fiscal stimulus remains somewhat limited. http://www.todayszaman.com/tz-web/news-182368-turkish-central-bank-governor-says- talks-with-imf-going-on.html Turkish central bank governor says talks with IMF going on Talks between Turkish government and the International Monetary Fund, or IMF, are still going on, Turkish Central Bank Governor Durmuş Yılmaz said on Wednesday.Talks between Turkish government and the International Monetary Fund, or IMF, are still going on, Turkish Central Bank Governor Durmuş Yılmaz said on Wednesday.

"There is no reason to be pessimistic. We will continue to do our job; with or without IMF," Yılmaz told a press conference.

Turkey and the Washington-based lender are holding talks on a possible loan deal for months. In May, Turkey completed a 10-billion USD stand-by arrangement with IMF.

Earlier in July, Turkish Prime Minister Recep Tayyip Erdogan said his government was eager to strike a deal with the Fund ahead of an international IMF meeting in Istanbul scheduled for September.

Asked about the upward trend in Turkish stock market and weakening foreign exchange rates versus Turkish lira, Yılmaz said all these indicators were considered as the "worst of the global downturn was behind" in domestic and international markets.

"But I have to tell one thing that weathering this economic crisis would be slow and gradual. It will not be quick," he said. He said everybody should act prudently, however, he added that more and more figures were turning positive every passing day, although it was a little bit slow. http://www.hurriyetdailynews.com/n.php?n=imf-loan-may-be-delayed-to-2010-analyst- says-2009-08-04 IMF loan may be delayed to 2010, analyst says Font Size: Larger|Smaller Tuesday, August 4, 2009 ISTANBUL - Bloomberg

Turkey probably won’t reach a new loan agreement with the International Monetary Fund, or IMF, until next year, said Luis Costa, emerging markets debt strategist at Commerzbank in London.

Talks with the IMF stalled in January amid disagreements over government spending and tax collection. Turkey will announce its medium-term economic plan and 2010 budget in October, Yeni Şafak newspaper reported Monday, citing unidentified officials. Turkey will host the annual meetings of the fund and World Bank in Istanbul on Oct. 6 and 7.

“The budget is already late and they are still trying to prepare medium-term measures,” London-based Costa said on Monday. “An IMF deal will need another five to six months to materialize. I am reasonably confident we won’t see anything materializing before next year.”

In April, the government increased this year’s budget-deficit target to 48 billion Turkish Liras ($33 billion) from 10.4 billion liras set in October as the global recession cut revenue.

The deficit may exceed the government’s target by more than 25 percent this year unless it cuts spending, Finance Ministry officials in Ankara said last week on condition of anonymity because the government hasn’t made a decision on spending.

Turkey and the IMF are still negotiating the budget, Costa said. “They still haven’t agreed on the size of a detailed road map toward a better restructuring of public finances.”

Meanwhile, an analyst at Barclay’s Capital said the Turkish Central Bank may lower the benchmark borrowing rate by 50 basis points this month and 50 basis points in September. The Bank may lower rates further in October, Christian Keller, chief economist for emerging Europe at Barclay’s Capital in London, said in an e-mailed report. “Price developments continue to signal very weak demand,” Keller said. “Inflation risks for the remainder of the year seem rather limited.”

In a statement Tuesday, the Central Bank said inflation may post “limited rises in the coming months” because of the comparison with low rates recorded a year earlier. Measures of core inflation will remain “low,” the Bank said, commenting on July inflation, which slowed to 5.4 percent from 5.7 percent a month earlier.

Monthly consumer-price inflation fell 0.2 percent in August 2008.

The Bank bought $30 million in the first of a restarted series of daily purchase auctions on Tuesday, aiming to build up its reserves. The Central Bank bought the dollars at an average price of 1.4621 liras and got bids totaling $141 million for the auction. The price ranged between 1.4619 and 1.4625 per dollar. http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=980&date1key=2009- 08-13 http://www.forbes.com/feeds/afx/2009/08/12/afx6768992.html Turkish banks lead index lower, IMF eyed

ISTANBUL, Aug 12 (Reuters) - Turkish banks took the blue-chip index lower on a second day of profit taking on Wednesday while investors weighed up a report on measures sought by the International Monetary Fund for a fresh loan deal.

Istanbul's main share index fell 2.43 percent to 42,616 in early trade, extending a loss of 2.25 percent on Tuesday. The index has risen 60 percent so far this year.

It underperformed the MSCI index of emerging market equities , which fell 1.69 percent as markets waited to hear what the Federal Reserve has to say about prospects for a U.S. economic recovery. The most traded stocks were from the banking sector, with Garanti Bank down 1.94 percent.

'Profit taking, which started yesterday afternoon, is expected to continue today,' Erkan Savran, head of research at AK Investment, said in a note. He says the index's support level at 42,700.

Investor attention focused on a report in Star newspaper, which did not provide any sources, that the IMF wants Turkey to agree to additional fiscal measures worth 50 billion lira over the next two years as part of a loan deal.

The IMF expects Turkey to reduce government spending while increasing its revenue through tax hikes before agreeing to a new deal, which is expected next month, Star said.

Turkey has been negotiating with the international lender since its last accord expired in May 2008 but has not agreed to budget curbs and other measures expected by the Fund.

Investors would like to see the government commit to a loan deal to help the country cover its foreign-denominated debts. The lira weakened to 1.5150 against the dollar on the interbank market from a close of 1.4950 on Tuesday.

BANKS FALL

The decline in shares was driven by the banking index , which makes up about 40 percent of the Istanbul index and which fell 1.44 percent as investors assessed banks' second quarter results.

Halkbank dipped 0.65 percent, outperforming the market, after reporting a 24 percent increase in second-quarter profit as record low interest rates reduced its funding costs and allowed it to cut payments on its deposits.

Top lender Isbank was off 1.94 percent at 5.05 lira.

Traders were monitoring the Federal Reserve meeting, with expectations that it will leave benchmark interest rates near zero and let a $300 billion programme to buy Treasury securities expire on schedule in September as economic gloom lifts.

The benchmark May 11, 2011, bond yield rose to 10.41 percent from 10.14 percent on Tuesday. Bonds have rallied since the yield hit 13.66 percent on June 8. http://www.todayszaman.com/tz-web/detaylar.do?load=detay&link=170105&bolum=105 PM Erdoğan stands his ground on new IMF conditions Prime Minister Recep Tayyip Erdoğan has reiterated his opposition to the International Monetary Fund’s (IMF) conditions for a stand-by agreement that had caused an indefinite suspension of the new deal.

He said the IMF must not act differently with Turkey and must abide by the predetermined rules of the negotiations, hinting that a deal is not likely to be determined otherwise. The talks between the IMF and Turkish officials are still in progress with hopes boosted as the IMF recently suggested it may step back from its latest conditions.

Speaking on a live broadcast on the TGRT Haber news channel, Erdoğan stated that he has occasionally warned IMF officials to avoid the perception that Turkey is a country teetering on the verge of a collapse. "Stick with what was agreed to initially, and don't change your conditions while the talks are in progress. I have told them that we will not welcome you if you come with new offers for every session of talks," the prime minister said.

As regards the IMF's proposal to make the Revenues Administration (GİB) autonomous, Erdoğan said the government is already attempting to reform the administration in order to empower it with better efficiency by combining, for example, officials dealing with revenues and taxes, connecting them directly to the Finance Ministry. "But, when it comes to making the Revenues Administration autonomous, we are not in favor of such an option," Erdoğan insisted. Erdoğan further defended the recent "wealth amnesty" program, which he explained eliminated the usual questions into the source of funds entering Turkey. "We provided a cash flow into the domestic markets with this wealth amnesty program," the prime minister underlined and insisted that reinstituting the questioning will push the economy into a bottleneck. Erdoğan recalled that Turkey has taken measures in 47 headings areas since the crisis started to affect the national economy last year. "It was not so vital a necessity to put them all in a single packet and announce it as a combined folder," he said to clarify why these measures were so fragmented instead of being organized into a comprehensive stimulus package. The next possible steps are always being discussed by the members of the Economic Coordination Board (EKK), made up of representatives from the government and employers and employee organizations. "The issue of the liquidity support was discussed in the EKK meetings, and a seven-article measure was promoted as a consequence. In addition, there have been studies on tax and premium incentives, and steps were taken toward solutions in 26 major areas. We have also conducted studies on providing loans and guarantees specifically for the producers and exporters," he stipulated, as some of the measures the government applied to avert the crisis.

The prime minister also responded to claims asserted by the opposition that Turkey's debt had soared during the Justice and Development Party's (AK Party) time in office. "Turkey is not in trouble with its debts, as alleged by the main opposition party.

Turkey doesn't have $500 billion in debt. The total external and domestic debt of the public sector is just around $142 billion, while the private sector has $200 billion in debt, in total. So these two combined, the total debt is $342 billion. There is no meaning in misleading the public with such false information as claimed by the opposition," Erdoğan said. He also displayed outrage over the opposition's assertion that debt figures have to be evaluated as a percentage of gross domestic product (GDP).

Recalling that Turkey's GDP had risen $230 billion to $750 billion since they took over the country's administration in 2002, the prime minister said the public debt had fallen to $142 billion, bringing the rate of public debt over GDP from 64 percent to nearly 25 percent. http://www.hurriyet.com.tr/english/finance/9663998.asp?scr=1 Any new IMF-Turkish deal seen setting fiscal rules Any deal between Turkey and the International Montetary Fund (IMF) is expected to set explicit fiscal rules with formalized ceilings for government expenditures as the global lender has advised, senior government sources told Reuters.

The sources, who declined to be named, said Turkey was mostly likely to opt for a precautionary stand-by loan accord, as has already been suggested by government officials, after its three-year $10 billion stand-by loan deal expired in May. Economists say a precautionary stand-by deal would be particularly welcome due to Turkey's vulnerability to shifts in global liquidity because of its huge currency account deficit, largely funded by foreign investment and government borrowing.

Ankara may announce a decision on a new agreement with the International Monetary Fund in September or October if it opts for a new deal, Economy Minister Mehmet Simsek said this week.

Prime Minister Tayyip Erdogan has been reluctant to quickly go for another loan deal due to the poor image the IMF has among the public, local elections in early 2009 and a desire to show that Turkey can stand on its own feet, analysts say.

Technical work on a new accord was continuing and no decision has been made on the new deal, Simsek said.

Government sources said clear and binding fiscal rules in any new agreement were likely to include ceilings for government expenditure and the social security deficit in addition to primary surplus targets.

"The introduction of fiscal rules is viewed favorably. Certainly the government is willing to set out its intent in this direction," one senior government source said.

The IMF has advised Turkey to set out fiscal responsibility rules, a policy which has greatly helped economies of other countries such as Brazil and New Zealand, as a new anchor for its fragile economy.

The IMF has called on Turkey to formalize its existing fiscal targets by making public pledges and said it can implement a fiscal rule regime in the context of an precautionary stand-by accord.

One of the senior government sources also said an IMF team may be sent to Turkey around the start of September in order to reach an accord before the draft budget is presented to parliament in October.

Turkey has to agree to some form of agreement because it still owes the fund some $6 billion. http://www.forbes.com/feeds/afx/2009/05/15/afx6427298.html Turkey seeks primary surplus for IMF deal - sources 05.15.09, 09:09 AM EDT

ANKARA, May 15 (Reuters) - Turkey is considering measures sought by the International Monetary Fund to enable it to post a primary surplus and to curb a steep rise in its budget deficit this year, government sources said on Friday. The level of government spending is a key source of friction in the talks between Turkey and the IMF, delaying agreement on a major loan programme which financial markets have long been clamouring for.

The sources said the signing of a deal with the IMF may be postponed until September if the talks on revised figures cannot be concluded in July.

Direct negotiations by a visiting IMF delegation on the loan accord, expected to be worth as much as $45 billion, were suspended in January.

The IMF insists that Turkey this year posts a primary surplus, which excludes interest payments on the government debt, the sources told Reuters.

The government is predicting a primary deficit at 0.5 percent of gross domestic product this year as tax revenues tumble and stimulus measures raise the government's current budget spending.

The country's budget deficit soared 268 percent in the first four months to 20.073 billion lira ($12.78 billion), putting at risk the official end-2009 budget deficit target of 48 billion lira.

'It is possible that the negative 0.5 percent primary deficit is revised to a 0.5 percent primary surplus,' said one government official.

Turkey posted very high primary surpluses in 2002-2007 in an effort to reduce the government debt and the premium it pays to creditors.

The government fears that measures such as tax hikes may exacerbate Turkey's economic downturn. The IMF expects the Turkish economy to shrink 5.1 percent this year, higher than many other emerging market economies.

'There is no use in practice to raise tax rates if you cannot collect tax. This may cause an adverse reaction at a time of such big increase in unemployment,' said another government source.

Turkey's unemployment rate hit a record 16.1 percent in the Jan-March period. Cutting investment spending is not a preferred option for the government as this would reduce growth rates further, sources said.

(Reporting by Orhan Coskun and Hatice Aydogdu; Editing by Victoria Main) ($=1.5695 lira) Keywords: TURKEY IMF/SURPLUS http://www.hurriyet.com.tr/english/finance/10781799.asp?gid=244 IMF says "good progress" made in Turkey towards a loan agreement The International Monetary Fund said on Thursday the talks with Turkey on the new loan deal are making "good process" towards an agreement. IMF Executive Director Kiekens arrived in Ankara to join the fund delegation in the talks with the Turkish government. (UPDATED)

"A mission is currently in the field and good progress is being made toward an agreement," IMF spokesman David Hawley told a regular news briefing, according to Reuters.

Turkish business leaders and investors have long called for a loan accord to stabilize the Turkish economy, which has slowed sharply this year while its markets have been hit by the effects of a global crisis.

Talks with the IMF have been continuing since September, after Turkey's previous $10 billion stand-by loan accord expired in May.

Turkish stocks, bonds and the lira gained Thursday on expectations that the government will soon complete a loan agreement with the IMF to support the slowing economy.

The main ISE National 100 Index of stocks climbed 0.1 percent to 25,072.30 at 5 p.m. despite the falls in the global markets. Government bonds also gained, driving yields 34 basis points lower to 15.65 percent, according to Bloomberg data. The lira currency rose to 1.6184 against dollar from earlier levels of 1.62.

The IMF delegation is in Ankara and has been holding talks with the Turkish officials. IMF Executive Director Willy Kiekens arrived in Ankara to join the talks.

Kiekens will hold talks with Economy Minister Mehmet Simsek in Ankara Friday. http://www.forbes.com/feeds/afx/2009/05/29/afx6481058.html UPDATE 1-IMF says talks with Turkey on loan pact ongoing 05.29.09, 01:27 PM EDT

ISTANBUL, May 29 (Reuters) - Talks between the International Monetary Fund and Turkey on a new loan accord are 'intensively' ongoing, Hossein Samiei, the fund's representative in Turkey, said on Friday.

Turkey and the IMF have been engaged for months in negotiations over a loan deal after the country's last accord expired in May 2008. Protracted talks have failed to produce a loan accord, expected to reach $45 billion, due to differences on the public sector spending and fiscal reforms.

'The discussions are intensively, seriously ongoing. I'm not aware of a delay. I have no secrets to hide,' he told an economic conference. 'The IMF and the government agree in principle on many of the policy measures Turkey needs,' he said.

A Turkish newspaper this week quoted Economy Minister Ali Babacan as saying that the government does not have consensus on an IMF deal -- the latest in a series of remarks coming from Turkish policymakers that appeared to cast doubt on a deal.

Prime Minister Tayyip Erdogan has said he would not agree to the IMF demands to curb spending and the Central Bank has said Turkey needs a Plan B, pouring cold water on market hopes for a quick deal that would bolster investor confidence.

A $10 billion IMF stand-by agreement expired in May 2008 and the current talks are aimed at a new three-year stand-by deal.

Absence of IMF funds would hurt Turkey's economic prospects this year, when the IMF sees economic activity shrinking by 5.1 percent. http://www.forbes.com/feeds/afx/2009/07/29/afx6712871.html Turkey's Yilmaz says talks with IMF 'uninterrupted' 07.29.09, 05:20 AM EDT

ISTANBUL, July 29 (Reuters) - Turkey and the International Monetary Fund are continuing negotiations on a new loan accord and there is no reason to be pessimistic about a deal, Central Bank Governor Durmus Yilmaz said on Wednesday.

Talks have continued 'uninterrupted' since the Washington-based lender's spring meetings, Yilmaz said in comments that were televised live.

The Central Bank will maintain its policies regardless of whether the government agrees with the IMF on an accord, he also said.

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