| Yesterday, an IMF mission urgently arrived in Ankara. In the coming days, she is due to present recommendations to the Fund's board of directors on the allocation of an emergency loan of $6 billion, with the help of which the Turkish government hopes to stop the rapidly developing financial crisis. The board meeting, as announced yesterday by IMF Managing Director Horst Köhler, is scheduled for December 21. However, the situation threatens to get out of control before this date: as Washington admits, “the days are counting.” Already, the banking system in the country is practically paralyzed. Over the past two weeks, stock indices have fallen by 40%. On Monday, the refinancing rate reached almost 20 thousand percent (for comparison: in Russia at the height of the 1998 crisis it did not exceed 150%). Investors are urgently withdrawing capital abroad. The Turkish Central Bank's attempt last Friday to turn the situation around by selling almost $3 billion on the market yielded nothing.
"The Turkish government has made significant progress in implementing the reform program adopted at the end of 1999. The challenge now is to maintain these achievements and strengthen policy and market confidence in the Turkish economy," says Horst Köhler. At the same time, many blame the IMF for the current crisis. Let us recall that a year ago the Fund supported a liberal reform program, the elements of which included fixing the exchange rate for two years in advance and measures to reduce inflation. Until recently, the IMF notes, Türkiye was implementing the program, and only in the fall did inflation increase sharply (44% by October 1999). However, as a result of the new policy, Turkish banks lost their source of cheap money, while continuing to pay high interest rates on their obligations.
Throughout the past week, “anti-EMWEF” demonstrations took place in the country. Meanwhile, the government continues to declare that it does not intend to deviate from the line outlined in the agreement with the IMF. The Fund is still considering options - stick to the “old” policy or switch to a floating exchange rate regime, which risks losing foreign exchange reserves and repeating the Russian scenario of 1998. However, economic calculations may become irrelevant if the financial crisis develops into a political one and, as happened in Russia, a new government sits down at the negotiating table with the Fund. Marina BORISOVA
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