May 24 2019

IMF calls on Turkey to ensure economic, financial stability

The International Monetary Fund called on Turkey to ensure that its economy and financial markets are stabilised.

The request is not a new one, IMF communications director Gerry Rice said at a press briefing in Washington D.C. on Thursday.

“As we’ve said before, not a new statement, but to reiterate -- we recommend a comprehensive clearly communicated policy package to secure macro-economic and financial stability,” Rice said in response to reporters’ questions.

Rice said that the IMF continued to monitor the economic situation very closely and it had “no indication from the Turkish authorities that they are contemplating a request for financial assistance.”

Turkey experienced a currency crisis last year and its embattled lira has continued to decline in 2019. The lira rose 0.4 percent to 6.07 per dollar at 1:25 p.m. local time in Istanbul on Friday, paring losses this year to 12.6 percent.

Ratings agencies, economists and the Organisation for Economic Cooperation and Development (OECD) have called on Turkey to abandon ad-hoc economic measures, clearly outline a schedule of structural reforms, clean up the balance sheets of banks and ensure the independence of institutions including the central bank.

President Recep Tayyip Erdoğan rejected criticism of the government’s policies on Thursday, saying the country has “stood tall” in the face of financial turmoil and attacks on its economy, thanks to the government’s policies. Erdoğan has repeatedly ruled out the option of IMF financial assistance. A previous loan accord expired in 2008.

Inflation in Turkey stands at almost 20 percent compared with a government goal of 15.9 percent for the end of the year. Meanwhile, the budget deficit totaled 68 percent of a 2019 target as of April after a series of tax cuts and other economic stimulus measures.

Also on Thursday, Treasury and Finance Minister Berat Albayrak announced a surprise $5 billion package of preferential loans from state-run banks for manufacturers. He introduced financial aid of equal size for the energy industry in April.