Search

 

Cablegate: Imf, Turkey Expect to Sign Loi for 8th Review Next

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

290946Z Jun 04

UNCLAS ANKARA 003662

SIPDIS

SENSITIVE

STATE FOR E, EB/IFD/OMA AND EUR/SE
TREASURY FOR OASIA - MILLS AND ADKINS
NSC FOR BRYZA AND MCKIBBEN

E.O. 12958: N/A
TAGS: EFIN PREL TU
SUBJECT: IMF, TURKEY EXPECT TO SIGN LOI FOR 8TH REVIEW NEXT
WEEK

REF: ANKARA 3409

1. (SBU) IMF ResRep told us June 28 that the
recently-completed Mission had resolved most outstanding
issues, although the work was harder and took longer than
expected. He predicted they would sign the Letter of Intent
for the 8th Review next week, enabling the IMF Board to
complete the review before it begins its summer holiday.

2. (SBU) Brekk said there were two substantive outstanding
issues when the Mission departed. First, the GOT needed to
agree to pass higher oil prices on to consumers, i.e., stop
compressing the Petroleum Excise Tax to avoid passing on
higher world prices. The government on June 29 announced a
five percent increase in petroleum product prices. Second,
the GOT had not been fully living up to its commitment to
transfer Special Revenues (which in the past were earmarked)
to the general budget. The end-June target was to transfer
TL 1.3 quadrillion ($872 million), but the GOT had only
transferred TL 600 million ($403 million) as of mid-June.
After the Mission departed, the authorities transferred
another TL 600 million, so they are now close to the end-June
target. Brekk said the GOT clearly had been trying to take
advantage of fiscal overperformance to spend more money
(i.e., use these formly earmarked funds for spending outside
the budget), but the Fund stopped this.

3. (SBU) In a June 25 conversation, Treasury U/S Canakci
agreed the review had been more difficult than expected, in
large part due to disagreements over the Petroleum Excise Tax
and a GOT proposal to expand investment incentives. He added
that the GOT and Fund had also discussed a GOT legislative
initiative to cap municipal borrowing (previously limited
only by Treasury's willingness to provide guarantees for
external borrowing). The GOT had proposed capping borrowing
at 200 percent of a munipality's annual revenue, but -- after
the Fund weighed in -- agreed to reduce the cap to 100
percent of annual revenues.

4. (SBU) Brekk said they would have to plug in revised
macroeconomic numbers to the LOI, based on GNP and inflation
figures due to come out June 30. He predicted that the GOT
would have to revise up both projected GNP growth and the
current account deficit, which he acknowledged was becoming a
concern. Canakci also acknowledged for the first time that,
because of the growing current account deficit and large debt
repayments, a financing gap was likely to emerge in 2005. He
reiterated that the GOT had not yet decided whether to seek
another IMF Stand-by, but said he understood from comments by
Fund officials that the IMF would be willing to provide more
lending if requested. Separately, AK MP Reha Denemec told us
June 28 that, in economic terms, there was no doubt that
Turkey needed additional IMF financing, but GOT officials
were hesitant because of the perceived domestic political
cost of pursuing that option.
EDELMAN

© Scoop Media

 
 
 
World Headlines

 


UN: Pope's Visit To Iraq "A Symbol Of Hope"

The visit by Pope Francis to the northern Iraqi city of Mosul at the weekend will be a symbol of hope and an opportunity to join forces for peace and unity, the UN cultural agency, UNESCO, said on Thursday, ahead of his touchdown in the capital, Baghdad... More>>

Myanmar: Military Must Stop Murdering And Jailing Protestors – Bachelet

UN High Commissioner for Human Rights Michelle Bachelet on Thursday said security forces in Myanmar must “halt their vicious crackdown on peaceful protestors,” following another day of deadly violence across the country on Wednesday... More>>

Syria: Economic Decline, Rising Hunger And Surging Humanitarian Needs

Syria’s fragile economy has “suffered multiple shocks” over the past 18 months, with its currency plummeting and joblessness swelling as people struggle to cover their basic needs, the UN Emergency Relief Coordinator told the Security Council ... More>>


Focus On: UN SDGs


Podcast: A UN Top Official’s Inspiring Journey To Leadership

UN Under-Secretary for Global Communications Melissa Fleming speaks to Agnes Kalibata, the Special Envoy to the 2021 Food Systems Summit, about her journey as a woman leader – from growing up as a Rwandan refugee in Uganda to becoming Rwanda’s Minister of Agriculture and now a top official at the United Nations... More>>

UNFCCC: Greater Climate Ambition Urged As Initial NDC Synthesis Report Is Published

UN Climate Change today published the Initial NDC Synthesis Report, showing nations must redouble efforts and submit stronger, more ambitious national climate action plans in 2021 if they’re to achieve the Paris Agreement goal of limiting global temperature rise by 2°C—ideally 1.5°C—by the end of the century... More>>


2021: Critical Year To ‘reset Our Relationship With Nature’ – UN Chief

During this time of “crisis and fragility”, the UN chief told the United Nations Environment Assembly on Monday that human well-being and prosperity can be vastly improved by prioritizing nature-based solutions. Painting a picture of the turmoil ... More>>