Turkey needs to consider IMF option as any Fed deal won’t be enough

Turkey needs to consider striking swap deals with several countries or sign a deal with the International Monetary Fund because any agreement with the U.S. Federal Reserve will not be enough to meet the country’s financial needs, Dünya newspaper reported, citing analysts.

The Turkish government is opposed to seeking loans from the International Monetary Fund, so its only option left is to get a liquidity boost from nations such as China, where a limited deal for currency swaps is already in place, Dünya said.

Turkey has reduced its holdings of U.S. government bonds to less than $3 billion, meaning any agreement with the Fed would be very limited in scope, said Orkun Gödek, a strategist at Deniz Investment in Istanbul. Indonesia has secured $60 billion of liquidity from the Fed, but it holds $27 billion to $30 billion of U.S. assets, Dünya said.

Barring such deals, Turkey’s only other option would be to sign an emergency programme with the International Monetary Fund, which could carry conditionality that the government might not accept, Dünya said.

Turkish President Recep Tayyip Erdoğan has frequently rejected the option of IMF loans to help bolster the country’s finances and it is highly questionable whether he will do so now.