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Cablegate: Update On Turkey's Imf Program

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS ANKARA 000605

SIPDIS


SENSITIVE


STATE FOR E, EB/IFD AND EUR/SE
TREASURY FOR OASIA - MILLS AND LEICHTER
NSC FOR QUANRUD AND BRYZA


E.O. 12958: N/A
TAGS: EFIN PGOV ECON TU
SUBJECT: UPDATE ON TURKEY'S IMF PROGRAM

REF: A. (A) ANKARA 494
B. (B) ANKARA 458
C. (C) ANKARA 376


1. (SBU) IMF ResRep (protect) advised that Turkish
authorities delivered late January 22 a draft Letter of
Intent, along with a package of fiscal measures designed to
enable the government to reach its primary surplus target of
6.5 percent of GNP. ResRep said his initial impression was
that there were problems with both the draft LOI and the
fiscal package, but he cautioned that he and his staff would
not complete their assessment of the documents until late
January 24.


2. (SBU) ResRep said the measures in the fiscal package
appear, at first glance, to be insufficient to reach the 6.5
percent primary surplus target (although ostensibly they do
reach it). He noted that the Higher Planning Council, which
developed these measures in a January 18 meeting, would meet
again January 25 to review them. IMF staff hopes to provide
feedback to the GOT prior to that meeting. (Note: Embassy
does not yet have details of the fiscal package, but will
obtain and report them as soon as possible. End note)


3. (SBU) ResRep mentioned some of the other, continuing
concerns that need to be addressed before the Fund can
proceed with the Fourth Review:


-- resolution of Pamukbank. There still has been no progress
on resolving this case, though BRSA continues to meet with
the Cukurova Group (which owned the bank). IMF is concerned
BRSA's resolve will weaken, given its lack of political
support. (See septel)


-- the tax truce law. Parliament approved this law with
numerous amendments, which addressed some but not all of the
Fund's concerns about this law. One specific problem: the
cut-off date to benefit from the law was moved back from
end-October 2002 to end-August 2002, rather than the end-2001
date suggested by the Fund.


-- the procurement law. The law, as it currently stands, is
acceptable, but the Fund worries that Parliament will push
through amendments that would gut it.


4. (SBU) Per ResRep, once Fund staff here have assessed the
draft LOI and fiscal package, they will make a recommendation
to headquarters on next steps. One option would be to bring
out a team of fiscal experts, perhaps as early as next week.
Then, if it appeared the two sides were getting close to an
overall agreement, the full mission could come out, perhaps
after the February 10-14 Bayram holiday.


PEARSON

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