TURKISH GOVERNMENT MAY KNOCK AT FED’S DOOR FOR FINANCIAL SUPPORT

Hurriyet
Nov 11 2008
Turkey

The Turkish prime minister may appeal to the Federal Reserve for
financial support at the G20 meetings that would be held next week as
well as seek to finalize a new deal with the IMF, Referans business
daily reported on Tuesday. (UPDATED)

Tayyip Erdogan could appeal for financial resources from the Fed if the
IMF continues its demands of cuts in spending; a move the government
is reluctant to do ahead of the local elections in March 2009.

"Turkey has a young population, so that it has to continue its growth
path. What we are going to ask from the IMF is financial support to
our mid-term program instead of pushing for new conditions," Referans
quoted Erdogan as saying in a meeting with bank executives on Friday.

Turkey’s 10-billion dollar stand-by agreement with the IMF expired
in May and the government is yet to decide on the future shape of
the relations with the IMF amid global turmoil.

Turkish officials had said the main sticking point with the IMF is
the level of spending for local administrations.

MEETING WITH BUSH

Erdogan will travel to Washington to attend a ‘working reception’ to be
hosted by U.S. President George W. Bush, the Anatolian Agency reported.

Erdogan told bank executives that he would also meet with German
Chancellor Angela Merkel after Bush and ask them to help Turkey in
its bid to use Fed funds, Referans also said.

Erdogan is also likely to meet Fed Chairman Ben Bernanke during a
3-day U.S. visit on Nov. 13-15. Economy Minister Mehmet Simsek would
visit Washington ahead of the G20 meetings.

Deputy Prime Minister Nazim Ekren and Undersecretary of the Turkish
Treasury Ibrahim Canakci will accompany Erdogan and Simsek.

The Fed had provided a total of around $120 billion to Brazil, Mexico,
South Korea and Singapore through swap line mechanisms.

Economists voiced some concerns about Fed loans; in particular, that
this swap line mechanism provides short term financing and that this
would not be enough for Turkey amid the growing global crisis.

They added Turkey needs longer term financing and should be supported
with an IMF agreement. Some of them cited political concerns as well,
Referans reported.

An economist said the IMF is linked to the U.S. government while the
Fed is completely managed by the Washington administration. "What
would you do if you get a loan from the Fed and then in February or
March, newly sworn-in President Obama brings the Armenian claims to
the agenda?" Referans quoted an economist as saying.