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Turkey says may not need IMF aid

08 September 2009 11:35 (UTC +04:00)

Baku -APA-Economics. Turkish Central Bank Governor Durmus Yilmaz said the country no longer needs loans from the International Monetary Fund, so long as the government maintains fiscal discipline, Bloomberg reported.

IMF lending has become less crucial after Turkeyâ€™s 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 of between $20 billion and $40 billion for more than a year. The prospect of an agreement, which would involve curbs on government spending, has pushed bond yields to record lows and spurred a 68 percent rally in the main stock index this year.

â€œIf Turkey on its own can deliver the results which are expected of an IMF program, itâ€™s much better for the country,â€ Yilmaz said. â€œBut sometimes an external motivation is needed.â€

Yields on benchmark lira bonds, which exceeded 20 percent as recently as December, fell to a record low of 9.43 percent last week and rose 6 basis points to 9.49 percent today, according to an index of securities tracked by ABN Amro.

Turkeyâ€™s future relations with the IMF will be clarified during the fundâ€™s annual meetings in Istanbul in early October, Prime Minister Recep Tayyip Erdogan said Aug. 28.

Erdogan, who pledged to end Turkeyâ€™s reliance on IMF cash when winning power in 2002, faces re-election in two years time. His government completed a $10 billion accord with the fund in May last year.