Turkey to repay domestic debts if IMF deal: Babacan

Turkish State Minister for economy Ali Babacan explained how the Turkish government would use a possible IMF loan if Turkey inks a deal with the Fund.

Turkey to repay domestic debts if IMF deal: Babacan

Turkish State Minister for economy Ali Babacan explained how the Turkish government would use a possible IMF loan if Turkey inks a deal with the Fund.

Turkey and the International Monetary Fund (IMF), the Washington-based lender, have been holding talks on a possible loan deal for months. In May, Turkey completed a 10-billion USD stand-by arrangement with IMF. In July, Turkish Prime Minister Recep Tayyip Erdogan said his government was eager to strike a deal with the Fund ahead of an international IMF meeting in Istanbul scheduled for October.

Ali Babacan, who is also the Deputy Prime Minister, said money that could be obtained from the IMF would be used to repay domestic borrowing.

"We will put IMF loans in the Central Bank vaults. With the money in return, we will repay our domestic debts. This will be our major operation," Babacan told the state-run TRT in an exclusive from New York.

"Our domestic borrowing need will reduce so there will be money in domestic market. Every 1 billion USD from the IMF means 1.5 billion lira to be released to domestic market. It would be a resource to be used to revive consumption and investments. It would also have impacts on growth," Babacan said.

Babacan recalled that the Turkish government had recently unveiled its Medium Term Program and said it did not forecast a deal with the Fund.

"A deal with the IMF and a loan that could be secured from IMF would make better the picture foreseen in the program," he said.

Babacan also said that Turkey and IMF were holding talks quietly.

"We are working with a small team. Managing director and deputy managing director are our interlocutors. We are holding our talks at high level but with a small team. It has to be quiet and it requires some patience," he said. "We do not want to give a timetable."

Babacan said rejecting a deal with the Fund with populist attitudes would have consequences, adding, "we have to do the right thing for the sake of next generations. In the end, future of Turkey is at stake."

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Güncelleme Tarihi: 24 Eylül 2009, 15:03
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