Babacan: Fifth Review Talks Between Our Government And I.M.F. Have Been Completed

ANKARA - State Minister Ali Babacan said on Sunday, ''after finalizing some technical details, the fifth review works under the Stand-by deal between Turkey and the International Monetary Fund (IMF) will come to an end just before or after annual recess of the IMF Board between August 4 and 15, 2003.''
Together with IMF Turkey Desk Chief Reza Moghadam, Treasury Undersecretary Ibrahim Canakci, Central Bank Governor Sureyya Serdengecti and IMF Representative in Turkey Odd Per Brekk, Babacan held a press conference and assessed the fifth review works.
''It is impossible to make concessions from sensitivity and determination about implementation of economic program. As a result of our attitude without concessions, some improvements have been recorded in our economy, and we have begun realizing targets of the program one after the other,'' he said.
Babacan noted that recent economic figures had revealed that Turkey could easily reach its growth target of 5 percent for the year 2003.
Noting that they had recorded significant progress in disinflation, State Minister Babacan said that recent figures had showed that inflation would decreased to 20 percent at the end of the year.
''We have reached our target to increase all public budget non-interest surplus to 6.5 percent till May. However, a deviation of 2.3 quadrillion Turkish lira can be seen as of end-year. We expect this deviation to stem from consolidated budget balance. We have determined measures to prevent this deviation. These measures will be put into practice as soon as possible,'' he added.
BABACAN: ''POSSIBLE DEVIATION IN NON-INTEREST SURPLUS WILL BE COMPENSATED BY PREVENTING EXTRAVAGANCE IN EXPENDITURES''
Babacan said, ''measures to prevent a possible deviation in our target to increase all public budget non-interest surplus to 6.5 percent of the gross national product (GNP) will be put into practice as soon as possible.''
''A deviation of 2.3 quadrillion Turkish lira can be seen as of end-year. We expect this deviation to stem from consolidated budget balance. Tax return and increase in transfers to social security institutions can also cause this deviation. We have determined measures to prevent the deviation. These measures will be put into practice as soon as possible. These measures include prevention of extravagance in expenditures. However, we do not plan to make any deduction in social expenditures such as education and health,'' he said.
Babacan told reporters that a detailed statement about the measures would be made in the coming days after finalization of technical works.
''Removal of deviation in our target of non-interest surplus with these measures will lead Treasury to successfully carry out its finance program for the second half of the year,'' he said.
BABACAN: ''FIFTH REVIEW TALKS BETWEEN OUR GOVERNMENT AND IMF HAVE BEEN COMPLETED''
Babacan said, ''the fifth review talks between the government and the International Monetary Fund (IMF) under the Stand-by deal between Turkey and the IMF have been completed.''
Together with IMF Turkey Desk Chief Reza Moghadam, Treasury Undersecretary Ibrahim Canakci, Central Bank Governor Sureyya Serdengecti and IMF Representative in Turkey Odd Per Brekk, Babacan held a press conference and assessed the fifth review works.
''Despite intense agenda of the government and the parliament, we have recorded significant progress in structural reforms. As a result, the Direct Foreign Investments Law and the Enforcement-Bankruptcy Law were enacted. Also, privatization works have been accelerated. The Social Security Agency (SSK) and the Social Security Agency for the Self-employed (Bag-Kur), which are pre-conditions for finalization of the fifth review works, are expected to be approved this month,'' he said.
Babacan told reporters, ''works on the Public Finance Management and Control Law had come to the last stage. The draft will be submitted to the parliament in the coming days.''
''On the other hand, we have decided to suspend works on the second package on direct tax reform to the new legislative year in order to benefit from international experiences and deepen our discussions over the draft,'' he said.
Stressing that they were determined to continue implementing the economic program, Babacan said, ''our determination has been consolidated as a result of finalization of the fifth review works with the IMF.''
Noting that they would begin working on the budget for the year 2004 in the coming months, Babacan said, ''these works and structural reforms will put forward our determination and medium-term perspectives clearly, remove all uncertainties over our economy and make our stable growth permanent. Any deviation will not be in question in implementation of our economic program and in our targets.''
BABACAN: ''WE TARGET TO COMPLETE FIFTH REVIEW BEFORE AUGUST 4''
Babacan said, ''we target to complete the fifth review under the Stand-by deal between Turkey and the International Monetary Fund (IMF) before August 4, 2003. IMF Board will debate the fifth review before or after its annual recess between August 4 and 15.''
Babacan said, ''we expect the sixth review to be completed at the end of October or in November. As you know, a tranche of loan of nearly 500 million U.S. dollars is released after each review. There is not any change in number of tranches or in the amount.''
Upon a question about real interest rates, Babacan told reporters, ''after the atmosphere of confidence is settled in Turkey and we achieve success in our disinflation program, real interest rates will decrease considerably.''
Babacan recalled that enactment of the Social Security Agency (SSK) and the Social Security Agency for the Self-employed (Bag-Kur) were required for finalization of the fifth review works.
''We expect these laws to be debated at the parliament in the coming days,'' he said.
Upon a question about current accounts deficit, Babacan said, ''as a result of our works in import, export and tourism, we expect a current deficit about 3 percent of gross national product (GNP) as of end-year.''
Responding another question, Babacan said, ''we target to complete the fifth review before August 4, 2003. IMF Board will debate the fifth review before or after its annual recess between August 4 and 15,'' he added.
MOGHADAM: ''IMF DELEGATION AND GOVERNMENT HAVE REACHED AN AGREEMENT ON POLICY IMPLEMENTATIONS TO COMPLETE FIFTH REVIEW''
Noting that IMF delegation and the government had reached an agreement on policy implementations to complete the fifth review, Moghadam said that some measures would be put into practice in the coming days and weeks under the new agreement.
He said that the agreement was up to approval of IMF delegation and IMF Board.
Describing Turkey's target of non-interest surplus as one of the most important factors in the talks, Moghadam said that they had agreed with the government on measures to reach the target of non-interest surplus, which was set as 6.5 percent earlier.
He said that Turkey could reach its target at the end of the year after putting into practice these measures.
Stressing that targets and works about structural reforms should be accelerated, Moghadam said that social security regulation was one of the most important issues to this end.
Noting that macroeconomic environment had been continuing to develop, Moghadam said that Turkey had reached all its targets as of end-April and end-June.
Recalling that economic growth reached 7 percent in the first quarter of the year, Moghadam said that the government could reach its inflation target of 20 percent at the end of 2003.
He added that the government's putting into practice these measures would lead IMF Board to debate the fifth review, and the IMF Board could debate the fifth review before or after its annual recess between August 4 and 15.
(UK-MS) 20.07.2003