The International Monetary Fund will focus on Turkey's growth outlook and what it means for jobs and debt payments in its next review of a $19 billion loan deal, the Fund said on Monday.
The government said an IMF team would arrive in Turkey on Thursday for the eighth review under its three-year stand-by agreement, which is set to end next February.
"A key task will be to assess Turkey's growth prospects and the policies that might enhance them - critical because of its implications for debt dynamics and for accommodating a fast-growing labour force," IMF Turkey Representative Odd Per Brekk said in a statement.
The IMF agreement has helped hoist Turkey's economy out of a 2001 financial crisis, with IMF-backed policies slashing inflation close to single figures and opening the door to gross national product (GNP) growth of 5.9 percent last year.
But economists have voiced some concern that the growth rate, although healthy, has done little to create new jobs.
Brekk said a key focus of the review would be progress towards Turkey's 2004 public sector primary surplus target of 6.5 percent of GNP.
The indicator, which excludes interest payments, is closely watched by markets because of its implications for Turkey's ability to service and pay down its heavy debt load.
Prime Minister Tayyip Erdogan unnerved markets last month when he suggested Ankara could ease back on the size of its primary surplus.
Analysts said the IMF's focus on growth was no surprise.
"Turkey's debt sustainability will remain a source of concern in the coming four or five years no matter what market-friendly policies are implemented, but exaggerated fears are certainly unfounded," said Yarkin Cebeci of J.P. Morgan Chase.
Markets are also looking for clear signs of Turkey's future relations with the IMF after the current deal expires. The government is expected to say in the next few months whether it will seek fresh funding or opt for a monitoring arrangement while the country continues to pay off its IMF loans, but the latter path is unlikely to please investors. The IMF said other important areas for the next review would include tax administration, social security and banking reforms, the sale of assets of failed banks in receivership, and the future of the state-owned banks.
The IMF board is expected to meet to approve the review before its August recess, the statement added.
Comments
Comments are closed.