The IMF and the Turkish government have agreed upon a draft letter of intent, which should lead to the release of $1.6 billion worth of delayed loan payments. Finance minister Ali Babacan and the IMF Turkey desk chief Lorenzo Giorgianni announced that talks under the first and second reviews of the stand-by programme were now completed.
The first and second reviews will be combined and the IMF board is expected to meet in early December to approve the completion of reviews and the $1.6 billion loans. The IMF commitment came after the government finally agreed upon a budget for 2006, which includes plans for a primary surplus of 6.5% of GDP.
The Turkish government was also required to submit legislation to integrate three social security institutions and restructure debts before the board convenes. Babacan said that the submission of corporate tax reforms to parliament was also a condition. He promised that legislation regarding the merger of social security institutions will be completed by the end of January 2006, while approval of social security law reform may take until mid-February. The IMF Board had put the completion of the first review on hold in the summer after the government failed to the pass the social security reform in time.