"If there's an agreement with the IMF, it will be good for unemployment and growth. We'll soon see." Turkey and the IMF have been locked in talks since a previous $10 billion stand-by loan pact expired in 2008. Investors regard the fiscal deficit as the main risk to Turkey's economy, but an IMF accord would offer some assurance about the government's commitment to reining in the deficit.
Babacan's latest comments echo those made by other Turkish officials. Prime Minister Tayyip Erdogan said last week that talks on a loan accord were nearing an end but that a deal was not indispensable. The IMF's external relations director Caroline Atkinson is due to hold a regular press briefing in Washington at 930 am EST and she is expected to answer questions on Turkey-IMF talks.
Although Turkey is not in urgent need of funds, investors see another loan helping it reduce its debt-rollover ratios. IMF cash would help Turkey cut a fiscal deficit that ballooned last year as the government spent heavily to help the economy recover from a deep recession.