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Cablegate: Treasury Minister Says No New Imf Stand-By

VZCZCXRO8818
RR RUEHDA
DE RUEHAK #0524 0790552
ZNR UUUUU ZZH
R 190552Z MAR 08
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 5625
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUEHIT/AMCONSUL ISTANBUL 4010
RUEHDA/AMCONSUL ADANA 2787
RUEHBS/USEU BRUSSELS

UNCLAS ANKARA 000524

SIPDIS

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: EFIN ECON TU
SUBJECT: TREASURY MINISTER SAYS NO NEW IMF STAND-BY


1. (SBU) Summary: Treasury Minister Mehmet Simsek was widely
reported in the press March 17 as saying that Turkey did not need a
new stand-by agreement with the International Monetary Fund (IMF).
Simsek said the GOT is considering other types of agreements with
the IMF after the current stand-by agreement expires on May 10. IMF
Deputy Resident Representative Davide Lombardo said there have been
no discussions yet about post-program relations. He said the IMF
was considering combining the remaining reviews and making the full
USD 3 billion under the current program available, if time permits.
End Summary.

2. (SBU) Minister Simsek was speaking in New York at a
Turkish-American Business Council meeting. He said that Turkey's
economy could withstand global economic turmoil and a new IMF
stand-by agreement was not needed. He added that Turkey could
consider post-program monitoring or the use of a precautionary
stand-by agreement. The current IMF stand-by agreement expires May
10. It has been an anchor for Turkey's economic success since the
2001 financial crisis, and investors are very interested in what
relationship Turkey will have with the IMF after the current program
expires.

3. (SBU) Minister Simsek is expected to meet IMF Managing Director
Dominique Strauss-Kahn on March 20 in Washington. The GOT and the
IMF have not completed the seventh review under the current
agreement, due to continued delays in Parliamentary adoption of the
social security reform, a seventh review pre-condition.

4. (SBU) We met with IMF Deputy Resident Representative Davide
Lombardo on March 17. Lombardo said the IMF was aware of
parliamentary delays but remained confident about GOT resolve to
finally pass the Social Security Reform. Lombardo confirmed IMF and
the GOT had not made any agreements about relations after the
current program expires. He noted that it was important for the GOT
to provide a favorable environment to attract continued
international investment. Turkey's high current account deficit
remains a risk, especially in an environment with record oil prices.
Lombardo said the plan was for the GOT to complete two more
reviews, provided they meet the relevant conditionality, and have
access to the full remaining un-disbursed amount, which is just
under USD 3 billion. Lombardo noted the possibility of a
combination of the final reviews, although the fast-approaching
deadline may not allow this to happen.

5. (SBU) Comment: While we are reporting Simsek's remarks from press
reports, multiple newspapers quoted him as saying no to a new
stand-by. While loosening the IMF anchor may seem inadvisable in
the current environment (with global financial uncertainty, a
tarnished EU anchor, and deteriorating economic indicators), it
tracks with GOT thinking that it does not want its hands tied on
economic and fiscal policies. End comment.

WILSON

© Scoop Media

 
 
 
 
 
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