Front Matter

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© 2002 International Monetary Fund

July 2002

IMF Country Report No. 02/137

Turkey: 2002 Article IV Consultation and First Review Under the Stand-By Arrangement—Staff Report; Staff Statement; Public Information Notice and News Brief on the Executive Board Discussion

Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of a combined discussion of the 2002 Article IV consultation with Turkey and first review under the Stand-by Arrangement, the following documents have been released and are included in this package:

  • the staff report for the 2001 Article IV consultation and first review under the Stand-by Arrangement, prepared by a staff team of the IMF, following discussions that ended on March 18, 2002, with the officials of Turkey on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on April 4, 2002. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF;

  • a staff statement of April 15, 2002, updating information on recent economic developments;

  • the Public Information Notice (PIN) and a News Brief summarizing the views of the Executive Board as expressed during the April 15, 2002, Executive Board discussion of the staff report that concluded the Article IV consultation.

The documents listed below have been or will be separately released.

Letter of Intent*

Report on Observance of Standards and Codes

Statistical Appendix

The policy of publication of staff reports and other documents by the IMF allows for the deletion of market-sensitive information.

To assist the IMF in evaluating the publication policy, reader comments are invited and may be sent by e-mail to

Copies of this report are available to the public from

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Staff Report for the 2002 Article IV Consultation and First Review Under the Stand-By Arrangement

Prepared by European I Department in Consultation with Other Departments

Approved by Michael Deppler and Mark Allen

April 4, 2002

  • Discussions for the 2002 Article IV consultation and the first review under the stand-by arrangement (SBA) with Turkey were held in Istanbul and Ankara during March 5-18. The staff team comprised Messrs. Kähkönen (head), Aitken, Griffiths, and Rossi (all EU1), Mr. Flanagan (FAD), Messrs. Marston and Josefsson, and Ms. Gutierrez (all MAE), Mr. McGettigan (PDR), and Ms. Ricasa (assistant, EU1). Mr. Brekk, senior resident representative, and Mr. Piñerúa, MAE resident representative, assisted the mission, and the mission cooperated with World Bank staff on structural issues. Mr. (Çakir, Advisor to the Executive Director for Turkey, attended several meetings.

  • The mission met with the State Minister for Economic Affairs, Mr. Derviş; the State Minister for Foreign Trade, Mr. Toskay; the State Minister for Labor Relations, Mr. Keçeciler; the Minister of Finance, Mr. Oral; the Minister for Privatization, Mr. Karakoyunlu; the Undersecretary of the Treasury, Mr. Öztrak; the Undersecretary of the State Planning Organization, Mr. İzmirlioğlu; the Undersecretary of Finance, Mr. Dikmen; the Governor of the Central Bank of Turkey, Mr. Serdengecti; the Chairman of the Bank Regulation and Supervision Agency, Mr. Akçakoca; and other senior officials; as well as representatives of labor unions and the private banking and business communities.

  • The Turkish authorities intend to allow the publication of the staff report.

  • Turkey has accepted the obligations of Article VIII, Sections 2, 3, and 4.


  • I. Introduction

  • II. Background

  • III. Report on the Discussions

    • A. Macroeconomic Framework

    • B. Fiscal Policy and Debt Management

    • C. Monetary Policy

    • D. Structural Reform

      • Financial sector

      • Other structural reforms

    • E. Other Issues

  • IV. Safeguards Assessment

  • V. Staff Appraisal

  • Text Boxes

  • 1. Labor Market Developments

  • 2. Growth Prospects

  • 3. Turkey’s Competitiveness

  • 4. How Taxes and Reserve Requirements Distort Turkey’s Money and Foreign Exchange Markets

  • 5. Structural Conditionality

  • 6. Corporate Debt Restructuring: Experience in Other Countries

  • 7. Trade Policy Developments

  • Figures

  • 1. The Long View, 1964-2001

  • 2. Growth and Inflation in Turkey and Developing Countries, 1974-2001

  • 3. Market Developments, 2001-02

  • 4. Monetary Developments, 1998-2002

  • 5. Inflation, 1996-2002

  • 6. Monetary Program, 2001-02

  • 7. Output and Demand, 1992-2002

  • 8. Recovery After Crises in Turkey and Selected Emerging Economies

  • 9. Aggregate Demand, 1995-2001

  • 10. Export Market Shares in Selected Partner Imports, 1970-2000

  • 11. Export Performance and Real Effective Exchange Rate, 1998-2001

  • 12. Competitiveness Indicators, 1990-2002

  • 13. Balance of Payments Indicators, 1995-2001

  • 14. Medium-Term Scenarios, 1997-2006

  • 15. Fiscal Indicators, 1995-2002

  • Tables

  • 1. Selected Indicators, 1999-2004

  • 2. Prior Actions and Benchmarks Relevant for the First Review

  • 3. Indicators of External Vulnerability, 1998-2004

  • 4. Balance of Payments, 1997-2005

  • 5. Medium-Term Macroeconomic Framework, 1997-2006

  • 6. Indicators of Fund Credit, 2000-06

  • 7. External Financing Requirements and Sources, 1997-2005

  • 8. Public Sector Primary Balances, 2000-02

  • 9. Monetary Aggregates, 1999-2002

  • 10. Central Bank Balance Sheet, 2000-02

  • 11. Banking System—Selected Indicators, 1998-2001

  • Appendices

  • I. Fund Relations

  • II. Relations with the World Bank Group

  • III. Statistical Information

  • IV. Understanding the Inflation Process in Turkey

  • V. Report on External and Financial Vulnerability

  • Attachment. Letter of Intent

  • Annexes

  • A. Quantitative Performance Criteria and Indicative Targets for 2002

  • B. Structural Policies, 2002-04

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Public Information Notice (PIN) No. 02/46


April 19, 2002

International Monetary Fund

700 19th Street, NW

Washington, D. C. 20431 USA

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News Brief No. 02/32


April 15, 2002

International Monetary Fund

700 19th Street, NW

Washington, D. C. 20431 USA

Turkey: 2002 Article IV Consultation and First Review Under the Stand-By Arrangement-Staff Report; Staff Statement; Public Information Notice and News Brief on the Executive Board Discussion
Author: International Monetary Fund