WASHINGTON - "The authorities' commitment to maintain tight monetary and fiscal policies and advance structural reforms deserves the support of the international community," said John Lipsky, First Deputy Managing Director and Acting Chairman, on Wednesday.
Lipsky released a statement on Turkish economy after the approval of fifth review under the Stand-By Arrangement for Turkey which will enable Turkey to draw immediately an amount of USD 1.13 billion.
"Close adherence to the authorities' policies under the Fund-supported program will be key to ensuring continued stable growth with lower inflation, and to reducing the vulnerability of the economy to any sudden shift in market sentiment. Helped by Turkey's sound policy framework, the economic consequences of the May-June turbulence were contained, with growth remaining robust and balance sheets proving resilient. Buoyed by the central bank's decisive policy response, financial markets stabilized quickly. However, inflation remains well above target, the current account deficit continues to widen, and public debt remains high," said Lipsky.
Lipsky noted that Turkish authorities' commitment to the 6.5 percent of GNP primary surplus target for 2007 was welcomed.
However, "achieving this target will require keeping spending under tight control, improving health spending efficiency, and preserving the tax base. Over the medium term, budget quality needs to improve, including by lowering distortionary taxes and increasing investment spending," he noted.