Turkey Will Need IMF Support for 2-3 Years: Dervis

August 25, 2002 - 0:0
ISTANBUL -- Turkey will need continued support from the International Monetary Fund for the coming two or three years, former economy minister Kemal Dervis said late on Thursday.

Dervis was the architect of a three-year $16 billion loan deal signed with the fund in February 2002. He resigned from office earlier this month to pursue a political career and was expected to formally join a center-left party, Reuters reported.

"Turkey needs IMF support for two or three years more," Dervis said in a television interview late on Thursday. It was not clear whether he was referring to the existing loan package or to a need for new lending.

Analysts say Turkey will probably need loans of some sort next year but a general election on November 3, the possibility of a war in neighboring Iraq and volatile domestic interest rates make it hard to say how much it will need and from where.

Dervis, who came to Turkey from the World Bank last year as an independent, has tied his electoral fortunes to the Republican People's Party, offering it as the standard-bearer for secular Turks who want to keep the IMF deal on the rails.

Dervis did not rule out a post-election coalition with the Justice and Development Party (AKP), a powerful conservative group suspected by some in the military of Islamist leanings.

The economist, however, stressed that Turkey's debt load and economic problems were so heavy that the only successful coalition would be one that shared the same "world view".

"Unless there is harmony in the government, I cannot take on responsibility for the economy," he said.

Financial markets would like to see Dervis return to the Economy Ministry. His prestige is seen as essential to good relations with international lenders and to bringing down the cost of running a domestic debt load of around $80 billion.

Dervis also stressed that he had not agreed to every IMF demand and had pushed a number of measures that the fund had not initially wanted.

He said the fund had initially objected to a plan to inject capital into local banks earlier this year. He said he had pushed for it as the only way to preserve Turkish-owned capital and prevent foreign banks buying up the entire sector.