Turkey expects to reach a 5 percent growth target in 2006, despite stiff rate hikes, and sees its primary surplus above a target of 6.5 percent of GNP, it said in a letter of intent to the IMF published on Saturday.
But the current account deficit, widened by a large oil bill and seen as weak spot in the economy, is expected to be at around 6.5 percent of gross national product this year, a shade higher than last year's 6.4 percent, Treasury Under-secretary Ibrahim Canakci told reporters.
"Our expectation is around 6.5 percent ... but it could be a bit higher, it could be a bit lower." The forecast is below a previous government estimate of 7 percent but contrasts with central bank comments on Friday that the ratio would shrink this year after a slide in the lira currency.
The International Monetary Fund approved Turkey's latest two reviews under a loan programme on Friday, releasing the next $1.85 billion tranche, and Canakci said the lender would be invited to Turkey for the fifth review in the second half of September or the start of October.
Turkey plans to make 4.5 billion lira in budget savings, with about half of that coming from health, after its primary surplus came in at a sub-target 6.2 percent in 2005. An above-target primary surplus would also help fight inflation, the July 7 letter said.
Inflation of around 10 percent helped knock about 25 percent off the lira in May and June, prompting the central bank to jack up borrowing rates 425 basis points.
The letter reiterated that the hikes would slow domestic demand in the second half. "Nevertheless, our program objective of 5 percent GNP growth for 2006 remains achievable." Economists expect growth of around 4.5 percent.
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