The IMF Executive Board signaled its continued support for Turkey’s macroeconomic policy and reform efforts, which have helped to propel growth, lower inflation, and reduce debt in recent years, when it approved a new three-year loan for $10 billion on May 11. “Turkey’s economic performance is at its strongest in a generation,” said IMF Managing Director Rodrigo de Rato after the Board decision. “The authorities’ new three-year program is designed to extend these gains in economic performance and reduce Turkey’s remaining vulnerabilities.”
Since the 2000-01 economic crisis, Turkey has implemented an ambitious program of macroeconomic and structural reforms, which delivered a decisive break with the country’s history of high and variable inflation, and low and volatile growth. Turkey successfully completed the last IMF-supported program earlier this year. During 2002-04, growth has averaged 8 percent a year; annual inflation has fallen from close to 70 percent to below 10 percent, the lowest in more than 30 years; and government debt has declined to 63.5 percent of GNP, from 90.5 percent.
Under the new program, the authorities seek to create conditions for sustained growth that will raise living standards and reduce unemployment; facilitate convergence with the European Union; and bring about an orderly exit from IMF lending. The Board also approved a one-year extension of $3.8 billion in repayments from Turkey arising in 2006. Turkey currently owes the IMF about $20 billion.