IMF Managing Director Horst Köhler on December 6 welcomed the additional measures announced by Turkish Prime Minister Bulent Ecevit to address Turkey’s current economic and financial problems. Stressing that the program deserves strong international support, he said he would ask the IMF Executive Board to approve a package of loans amounting to more than $10 billion, comprising about $7.5 billion under the IMF Supplemental Reserve Facility (SRF) and some $2.9 billion still available to Turkey under its current Stand-By Arrangement.
In a statement, Köhler said: “I welcome today’s announcement by Prime Minister Ecevit. The comprehensive set of additional measures demonstrates resolve and leadership in overcoming Turkey’s current economic and financial problems. The strengthened program builds on the achievements made so far in disinflation and fiscal consolidation and moves forward decisively the country’s structural reform and privatization agenda.
“I particularly welcome the government’s firm commitment to implement a bold set of measures to strengthen the soundness of the banking sector, aimed at tackling the root causes of the current problems. I welcome the firm action already taken in this respect, including the decision to protect depositors and other creditors in Turkish banks. The comprehensive package of strengthened policies should provide the basis for restoring confidence and sustaining growth in the Turkish economy” (IMF News Brief, No. 00/113).
IMF European I Department Director Michael Deppler explained that at the Board meeting scheduled for December 21, the Managing Director would propose an immediate drawing of $2.25 billion under the SRF and $550 million under the Stand-By Arrangement. Additional amounts would be made available throughout 2001: $1.1 billion on January 20; $1.1 billion on February 20; and then $750 million each on March 15, June 15, August 15, and November 15.
The SRF, established in December 1997, is designed to help members experiencing exceptional balance of payments problems resulting from a sudden and disruptive loss of market confidence. Access is not subject to the usual limits, and countries drawing under the facility are expected to repay within one to one-and-a-half years from the date of each purchase, although the Board may agree to extend this period by up to one year. Turkey’s current Stand-By Arrangement with the IMF was approved in December 1999 in an amount totaling $4 billion.