ANKARA - IMF Executive Board approved the 6th review and letter of intent under stand-by arrangement of Turkey, and released the loan tranche worth of nearly 1.135 billion USD, stated Turkish Treasury Undersecretariat on Friday.
According to the letter, "necessary safeguards were established to ensure that health spending developments do not jeopardize the achievement of this year's budget targets. In particular, monitoring of spending (both on accrual and cash basis) was stepped up to ensure corrective actions can be taken promptly."
"All accumulated obligations to public hospitals, as of end-March 2007, have been resolved, leaving no residual claims," noted the letter.
"We expect the deficit to fall to 7.25 percent of GNP this year, as the recent trend of slowing imports and strong exports is supported by robust growth in Turkey's trading partners, slowing domestic demand and more stable oil prices," stated the letter.
"We are committed to reducing inflation to the 4 percent target to provide a foundation for high and stable growth. Commodity price and exchange rate shocks contributed to a significant overshooting of inflation last year."
"As foreshadowed in the program, spending overruns (0.3 percent of GNP) recorded at end-December 2006 will be offset in 2007," noted that letter.
According to the letter, "the Constitutional Court ruled in December that many key provisions of the social security reform passed in April 2006 were unconstitutional, including all aspects of the pension reform pertaining to civil servants, where most of the medium-term savings were to be generated; changes in the valorization formulas for all workers; and the introduction of medical copayments for civil servants. Excluding these elements would significantly reduce the reform's long-term savings. We have thus postponed implementation of the reform."