Turkey May Not Need IMF Loan Accord, Central Bank Chief Says
Turkish Central Bank Governor Durmus Yilmaz said the country may not require a loan from the International Monetary Fund so long as the government maintains fiscal discipline, Bloomberg reported.
A loan is less essential after the current account deficit narrowed, Yilmaz said in an interview in London on Sept. 5 at a meeting of finance ministers and central bankers from the Group of 20 nations.
Turkey and the IMF have been discussing a possible loan program of between $20 billion and $40 billion for more than a year. The prospect of an agreement has helped bond yields to single digits and spurred a 68 percent rally in the main stock index this year.
"If Turkey on its own can deliver the results which are expected of an IMF program, it's much better for the country," Yilmaz said. "But sometimes an external motivation is needed."
The current-account deficit narrowed for the 10th straight month in June, helping reduce the need for external financing. Falling demand for imported goods is helping narrow the gap, which the government expects to shrink to less than $10 billion this year, or about 1.3 percent of estimated economic output. The deficit was $41.7 billion in 2008.
Turkey's future relations with the IMF will be clarified during the fund's annual meetings in Istanbul in early October, Prime Minister Recep Tayyip Erdogan said Aug. 28.