ANKARA - The International Monetary Fund has delayed release of a loan instalment of 800 million dollars (670 million euros) to Turkey pending adoption of a law to reform the social security system, the IMF and Turkish government said on Thursday.
IMF deputy director general Anne Krueger said in a statement received here: "Turkey's economic and financial performance remains strong.
"However the pension reform law could not be approved before Parliament recessed for the summer and IMF management decided that consideration of the first program review by the Executive Board needed to be postponed".
"The implementation of this law is a key component of the program's structural reform agenda and is needed at an early stage to bring Turkey's social security deficit under control."
The IMF had said last month that Turkey had to adopt two laws, one on social security and the other covering banking, in order to receive the instalment, part of a total loan of 10.0 billion dollars.
The Turkish parliament adopted the banking reform law on Saturday but has gone on holiday until October 1 without debating the bill on social security. However, Foreign Minister Abdullah Gul said that this was likely to be adopted when parliament reconvened.
Economy Minister Ali Babacan said on Thursday that despite the delay, the government would continue to work "meticulously" on "structural reforms" in line with a programme agreed with the IMF.
In May, Turkey and the IMF reached agreement on a new line of credit for three years and totalling 10.0 billion dollars. The first instalment of 837.5 million dollars was made available immediately.
The last IMF loan, of 16.0 billion dollars, was made in 2002 after a financial crisis in 2001. That loan expired in February.
07/07/2005 08:49 GMT