TURKEY - Dec. 14 - IMF To Lend $14.3 Bn.

IMF and Ankara officials agree a new 3-year standby deal, under which the IMF is to consider lending $14.3 bn in 2002. The deal is conditional on approval by the IMF's board when it meets in the second half of January. (The IMF has been negotiating the loan, which would make Ankara its biggest single borrower, under pressure from the US. The proposed loan, including $4.3 bn left over from the current IMF deal, is bigger than the actual $10 bn financing gap estimated for 2002. The point of this apparent discrepancy is to enable Ankara to substitute the longer-term standby money, repayable after four years, for a more expensive $5.5 bn IMF loan maturing in 2002. The money's disbursement - up to $9.4 bn of which could be paid early in the year, partly to help drive down interest rates now at around 70% - is also conditional on Ankara adopting demanding economic reforms. A tough 2002 budget approved by parliament this week aims to achieve a big primary surplus of revenue over expenditure equivalent to 6.5% of GDP).

Economy Minister Kemal Dervis says the IMF wants to see that the government has taken "all the legal steps to ensure that the budget for 2002 is actually secure". To this end, he reckons that he has been "60 to 70 per cent" successful in canvassing the support of opposition parties. The senior resident representative of the IMF Odd Per Brekk says the new programme aims in the medium term to help "unleash Turkey's great economic potential". Planned structural reforms include: completion of restructuring of the banking system in 2002; reforming taxation, reducing overstaffing in the public sector, and improving transparency in the use of public funds; enhancing the role of the private sector through a "revitalised" privatisation programme and streamlining obstacles to both domestic and foreign investment. Suggesting that the World Bank is considering additional loans of $3 bn for Ankara in 2002, Dervis says the government also aims separately to borrow $3 bn on international capital markets in 2002.