BY ERDAL SAGLAM
SABAH- I expected more concrete statements on the International Monetary Fund issue at last week`s Turkish Industrialists` and Businessmen`s Association (TUSIAD) meetings in Bodrum, but there were none. The businessmen said that Deputy Prime Minister Ali Babacan and IMF First Deputy Chairman John Lipsky didn`t talk openly, even at the meetings closed to the press. Their impression from Lipsky afterwards was that he thinks Turkey needs an IMF agreement. In other words, they got the impression that Turkey needs a standby agreement in order to maintain its economic stability in the years to come. So the business world heard from officials that the IMF agreement that it`s long been requesting from the government is technically necessary.
When I asked businessmen about this a few months ago, they told me they were hopeful about an agreement and that the government would reach one when necessary. But when I asked them again after these meetings, they weren`t so hopeful. This is their impression from not only this meeting, but also other developments over the last few months. When I spoke to Babacan after these meetings, he told me that they saw that their meetings and work were close to each other to a great extent and that there`s still work to do both in Ankara and Washington. He added that technical teams would be in touch and contacts would continue in the weeks and months to come.
Stating that the IMF is ready to support Turkey, Lipsky said that they were optimistic about Turkey`s future but that unless financial deficits and weakening loan quality are addressed, there might be clouds in the economic picture.
Actually these conversations again showed us that the government doesn`t want to sign a strict program for financial harmonization, though it`s needed, because it`s thinking about future elections. So Prime Minister Recep Tayyip Erdogan wants to continue without an agreement, if it`s not a very flexible one. But the picture isn`t as easy and simple as that.. So the technicians want to find common ground and convince the two parties to reach an agreement.
Keeping voters in the elections set for 2011 is putting pressure on Erdogan. But Turkey needs the IMF`s money and credibility so that it can grow and weather a new wave of global crisis. So Erdogan needs this agreement in order to avoid the troubles that we might face until the elections and thus prevent more vote hemorrhaging. We`ll see which path he`ll choose.
As we saw from the meetings, the government favors an 18-month or 24-month agreement at most. For its part, the IMF says that financial harmonization in 2010 should be stricter and that it would provide fewer the resources. So naturally Babacan is trying to soften the financial harmonization conditions and tap more resources. In other words, the government says that it`s accepting the financial harmonization, but that it can`t accept any additional primary surplus rate in 2010. I think the flexible conditions the government is seeking are unacceptable to the IMF, as they would set a bad example for deals with other countries. We`ll see in the next few months if the two parties can reach common ground.