Turkish Economy

[Boghos]

Turkey Asks for Deferral of $5.6 Bln IMF Debt Payment (Update2)

By Ali Berat Meric

 

 

Ottawa, Nov. 18 (Bloomberg) -- Turkey is still trying to get International Monetary Fund permission to defer the repayment of $5.6 billion in loans from the agency in order to cover a financing gap, Treasury Undersecretary Faik Oztrak said.

 

The $10 billion that the IMF plans to lend Turkey next year will be sufficient to bridge the gap only if the repayment is postponed, Oztrak said. Turkish officials asked the IMF in September to defer the repayment, due next year, and the IMF signaled at the time a postponement would be possible.

 

``If we're asked to pay back what comes due next year, then we'll request a new loan of parallel size to cover that,'' Oztrak said in a telephone interview from Ottawa, where he is attending a meeting of the Group of 20 nations.

 

IMF Turkey representative Odd Per Brekk said on Friday the Fund expects repayment of the $5.6 billion next year. Economists estimate that Turkey needs about $20 billion from international lenders in 2002 if the IMF loan isn't deferred.

 

Turkey's debts soared this year after an earlier IMF-backed economic program collapsed and the lira lost 55 percent of its value against the dollar. Public debt is expected to reach 90 percent of gross national product at the end of this year, up from 58 percent in 2000.

 

Financing Crunch

 

``The money they are trying to defer is mostly the central bank's liability,'' said Baturalp Candemir, an economist at HC Istanbul Securities in Istanbul. ``It's not directly related to treasury's financing needs, but they still want to defer if they can to keep reserves healthy.''

 

Turkish officials are negotiating the maturity and cost of the new $10 billion loan, Oztrak said. Turkey wants it to be repayable over many years, so it doesn't confront the same dilemma it's facing with repayment in 2002, he said.

 

``This additional fund is of course helpful, but it is only to get over the February collapse,'' Economy Minister Kemal Dervis said in Ottawa, according to the Hurriyet newspaper.

 

``Turkey should not be going to international lenders for additional loans every six to eight months,'' he said. ``We have to put this money to good use.''