IMF completes second review under Stand-By credit for Turkey, releases $295 million

• Pages: 234-235

Page 234

The IMF Executive Board announced in a news brief issued on July 6 that it has completed the second review under the Stand-By credit for Turkey. The full text of News Brief 00/52 is available on the IMF’s website (www.imf.org).

The review was completed in light of the observance of end-March performance criteria, among other things, and the judgment of the IMF that the program remains on track. As a result of the review, Turkey will be able to draw up to the equivalent of SDR 221.7 million (about $295 million) from the IMF (see page 236).

The three-year Stand-By Arrangement was approved on December 22, 1999, in a total amount equivalent to SDR 2.9 billion (about $3.9 billion). Turkey has so far drawn the equivalent of SDR 443.4 million (about $590 million) under the Stand-By Arrangement.

Commenting on the Board discussion, IMF First Deputy Managing Director Stanley Fischer said, “The Executive Board of the IMF commended the Turkish authorities on their steadfast implementation of the disinflation and fiscal adjustment program launched in late 1999, which led to a rapid deceleration of inflation and a resumption of economic growth.

“Strong fiscal performance in the first half of 2000 has underpinned the improvement in macroeconomic conditions. Despite stronger-than-expected revenues and a faster-than-anticipated drop in interest rates, expenditure policies were not relaxed. The authorities’ commitment to keep nominal primary expenditures in line with the program for the rest of 2000 will likely result in a primary fiscal surplus higher than that envisaged by the original program target for 2000.

“Inflation, while still high, has declined to its lowest level since 1986. Also, partly reflecting the increase in oil prices and the accelerated restocking of raw materials and intermediate goods, imports picked up significantly in the first four months of 2000. To ensure the attainment of the end-year inflation target, as well as to minimize risks to the external accounts, the authorities have appropriately committed themselves to strengthening the macroeconomic framework through firm fiscal policy implementation, particularly in the area of primary expenditure, as indicated above. They also stand ready to introduce additional fiscal measures if warranted by macroeconomic developments. The continued strict implementation of the program...