Koehler: Turkish Authorities Have Made Strong And Welcome Efforts To Implement Their Program Of Stabilization

ANKARA/WASHINGTON - International Monetary Fund (IMF) Managing Director Horst Koehler said early on Saturday that the Turkish authorities had made strong and welcome efforts in recent weeks to implement their program of stabilization and economic reform.
Koehler released a statement after the IMF Executive Board approved the fifth review.
IMF Managing Director Koehler said that those efforts included the measures put in place to safeguard the primary surplus target of 6.5 percent of Gross National Product (GNP).
Emphasizing importance of the European Union (EU) adjustment laws, Koehler said that progress on EU-related legislation was also welcome and it had undoubtedly contributed to improved market sentiment.
Koehler stressed that the program's projections of 5 percent output growth and 20 percent inflation in 2003 were within reach.
Real interest rates remained high reflecting underlying fragilities, Koehler stated.
Koehler said, ''completion of the review provides a valuable opportunity for the Turkish authorities to demonstrate full program ownership, and continue with consistent and steadfast program implementation. Key in this regard would be the maintenance of fiscal discipline to safeguard the 6.5 percent of GNP primary surplus target, not only for this year but also in 2004.''
''The Central Bank of Turkey (CBT) is to be commended on its skillful conduct of monetary policy. The CBT has successfully managed to increase confidence in its inflation objective, cut interest rates and accumulate reserves. The diligence shown by the Banking Regulation and Supervision Agency (BRSA) in its supervision of banks is welcome, as are other banking sector reforms. The authorities need to build on this progress by further improving bankruptcy procedures, privatizing state banks, and resolving the intervened banks. To enhance policy credibility, the authorities need to strengthen the operational and financial independence of regulatory agencies, including the BRSA,'' Koehler noted.
Koehler continued, ''in line with Fund policy, the Fund's Executive Board supported moving part of Turkey's repayments from 2004-05 to 2005-06 to strengthen debt management and thereby contribute to the success of the authorities' reform program.''
''Continued strong policy actions will allow Turkey to achieve its macroeconomic targets and maintain a viable debt position in the medium term. The Government's recent actions bode well for the success of the Fund-supported program. On this basis, Turkey's efforts deserve the continued support of the international community,'' Koehler added.
(BRC) 02.08.2003