Cablegate: Turkish Economy March 10: Ad Ref Agreement On

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

UNCLAS ANKARA 001499

SIPDIS

SENSITIVE

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

E.O. 12958: N/A
TAGS: EFIN PREL TU
SUBJECT: TURKISH ECONOMY MARCH 10: AD REF AGREEMENT ON
LOI; MARKETS SERENE

1. (SBU) IMF ResRep advised this morning that Fund staff and
GOT officials had reached ad ref agreement on a Letter of
Intent, and that IMF Mission Chief had returned to Washington
with the draft. We do not have details yet, but understand
from ResRep that the two sides reached a compromise agreement
on direct tax reform (based on a revised draft of the
legislation), and on reducing redundant positions in State
Enterprises (GOT agreed to pass decrees eliminating obstacles
to laying off SEE employees). The GOT is still talking with
the World Bank about how to resolve the issue of direct
income payments to farmers in the budget, but Fund staff
apparently decided this should not be an obstacle to
proceeding. (Note: World Bank Country Director Ajay Chhibber
was quoted in the press at mid-day today as saying the Bank
could not accept the budget, which he labeled "anti-poor,"
and would not proceed with its planned $1.375 billion loan
unless the budget was changed. End Note)

2. (SBU) Fund staff hopes to work out some smaller issues
over the next 7-10 days via e-mail. Then, the key question
will be enactment of the 2003 budget. Finance Ministry and
Parliamentary sources told us today that the Planning and
Budget Commission is scheduled to complete work on the budget
on March 16. The full Parliament could begin debate on the
budget as early as March 17. This debate normally takes
10-11 days (i.e., approval around March 28), though the
government could make a political decision to limit debate in
hopes of enacting the budget sooner.

3. (SBU) Markets remained calm this morning. The lira
strengthened to TL 1,608 million/dollar in the interbank
market. Yields on the benchmark 1/24/04 t-bill fell slightly
from 57.68 to 56.9, and the stock market rose 0.10 percent.
PEARSON

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