Anne Krueger, IMF First Deputy Managing Director, released a statement and announced that the IMF Management decided to postpone the Board meeting, where first review of Turkey's performance under stand-by programme and release of some USD 830mn loan tranche will be approved.
Krueger said that implementation of social security reform is a key component of the program's structural reform agenda and was needed at an early stage to bring Turkey's social security deficit under control. The parliamentary approval of the law was a performance criterion with the deadline of end-June, according to letter of intent.
However, parliament could not adopt the law as the summer recess started on July 3. On the other hand, the IMF official noted that Turkey's economic and financial performance remained strong as budget execution was on track and growth and inflation targets were well within reach, and Central Bank built reserves comfortably in excess of programme target thanks to strong capital reforms. Noting that authorities continued to pursue structural reforms, Krueger appreciated passage of banking law.
On a related note, economy minister Ali Babacan released a statement, which read that the officials would work on social security draft and submit it to parliament at the start of the new legislative year. The new legislative year will start in October. Thus, it is likely that the first review will be combined with the second one, which is expected to start in August or September (the earliest possible purchase date of second loan tranche is September 1, according to the letter of intent).