Turkey and the International Monetary Fund have agreed in principle on the conditions of a new loan deal worth up to $45 billion to help the country weather the global crisis, newpapers reported on Friday. Pressure for an accord has mounted as the economy slumped in recent months, putting it on course for deep recession. Gross domestic product tumbled 6.2 percent in the fourth quarter and industrial production slid by a quarter in February.
The reports, citing Economy Minister Mehmet Simsek, said the deal would meet Turkey's external financing needs. Business daily Referans reported Simsek as telling reporters he hoped to have the deal approved by the IMF in two to three weeks. Newspaper Radikal reported that the deal could be worth as much as $45 billion and would be signed for a three-year term. Other newspapers quoted different amounts. The initial size of the deal was seen at $20 billion, analysts said.
Simsek was quoted as saying that Prime Minister Tayyip Erdogan and IMF Managing Director Dominique Strauss-Kahn have agreed in principle to the foundations of a deal. "We've agreed to a set of principles, within that framework our hope is to finish the work (on the deal) on Turkey's side before its spring meetings," Simsek was quoted saying, referring to the next IMF meeting in about two weeks' time.
Same Old: Turkey to Get $20 to $45B IMF Lifeline
Turkey is a country which has never really weaned itself off IMF loans; take a look at its borrowing activity for a more or less uninterrupted history of obtaining lender of last resort support in the new millennium. Unfortunately, the current crisis is no different as it seeks another lifeline from the IMF, the last arrangement having expired in May of last year. Estimates put the size of the agreed deal somewhere between $20 to $45 billion. From Reuters:
