Turkey has reached an accord with the International Monetary Fund (IMF) on a package of measures to cover a 7,000 trillion lira ($5.3 billion) financing gap, government officials said on Wednesday.
The financing gap in the 2004 budget resulted largely from above-inflation minimum wage and pension rises. IMF officials are currently in Ankara reviewing Turkey's $19 billion loan accord with the Fund.
The officials told Reuters that measures had already been taken to cover some 6,000 trillion lira of the deficit.
The remaining 1,000 trillion lira was to be covered by 500 trillion from the budget's special expenditures items and 500 trillion from increases in value-added tax on cigarettes, the officials said.
Finance Minister Kemal Unakitan said on Tuesday the government would cut spending by 13 percent to cover the wage and pension hikes partly. Those spending cuts were seen saving 4,000 trillion lira with the remainder of the gap covered by steps such as the VAT increases.
An IMF team arrived in Turkey last week to resume the pact review, which is linked to the payment of a $500 million loan tranche. Talks had been suspended amid disagreement on tax issues and how to handle the expected budgetary shortfall.