Press Release No. 04/1

Press Release: First Stage of IMF Discussions for the Seventh Review of Turkey's Stand-By Arrangement to Start on January 12; Second Stage of Discussions Expected in February

January 8, 2004

An IMF mission, headed by Mr. Reza Moghadam, will visit Turkey January 12-21, 2004 to start discussions for the seventh review under Turkey's Stand-By Arrangement with the Fund. The team will first meet with non-governmental organizations in Istanbul, before continuing the discussions with the authorities in Ankara.

In light of the extensive reform agenda that needs to be agreed for 2004, and various logistical reasons such as the upcoming Bayram holiday, this mission is not expected to complete the seventh review discussions. Instead, the authorities and the Fund have agreed on a two-stage approach, with this first mission expected to be followed by a second one in February that will aim to conclude the discussions.

The mission's discussions will focus on the economic policies needed to secure and build on the impressive improvements in economic conditions achieved in 2003. In this regard, the mission will focus on steps needed to ensure that a public sector primary surplus of 6.5 percent of GNP is achieved, including measures to pay for the increases in minimum wages and pensions. The mission will also work with the government to develop the structural reform agenda for 2004, including actions to improve government budget management and revenue collection, strengthen the effectiveness and independence of the BRSA/SDIF, and enhance the environment for private-sector led investment and growth.

The Stand-By Arrangement supporting Turkey's economic program covers 2002-04. Of the total IMF financing of some US$19.2 billion, about US$2.5 billion remain to be disbursed. Completion of the seventh review by the Fund's Executive Board would trigger a disbursement of about US$500 million.