Jun 11 2018

Turkey a few steps from IMF rescue, ex-central bank chief says

Turkey is just a few steps away from requiring a new loan accord with the International Monetary Fund, former Central Bank Governor Durmus Yilmaz said.

Serious economic reforms are needed, Yilmaz said at a meeting of the Good Party in Ankara, according to Turkish newspaper Sozcu.

The country’s central bank has been forced to raise interest rates by 425 basis points since May to 17.75 percent to stave off a possible currency crisis. While Turkish inflation is 12.2 percent and its current account deficit is equal to about 6.5 percent of economic output, the country has relatively low public-sector debt levels compared with most nations. Corporate debt in foreign currency of about $226 billion is cited by analysts as the country’s weak point.

Turkey completed the last of 19 standby accords with the IMF in 2008 and President Recep Tayyip Erdogan is a fierce critic of the fund’s policies, which he says work to the detriment of emerging markets and in favour of foreign investors and international banks.

Yilmaz, was central bank governor between 2006 and 2011, when Erdogan was prime minister. He is an economic adviser to Good Party leader Meral Aksener, who is an opponent of Erdogan in presidential elections on June 24.