I.M.F. Approves Turkey's Letter Of Intent, Releasing Loan Tranche

ANKARA - IMF Executive Board approved the 6th review and letter of intent under stand-by arrangement of Turkey, and released the loan tranche worth of nearly 1.135 billion USD, stated Turkish Treasury Undersecretariat on Friday.

Treasury Undersecretariat released the Letter of Intent.

The letter states, "economic performance continues to be good. Growth remains close to the levels anticipated under the program, although it has softened from the pace of recent years following last year's financial market turbulence, which necessitated higher interest rates and reduced credit growth."

"Slowing import growth and strong exports have helped to stabilize the current account deficit, while external financing remains ample, led by continued large inflows of foreign direct investment," noted the letter.

"Inflation remains above target, but is expected to slow, supported by the tight policy stance of the central bank. Meanwhile, primary surplus in 2006 exceeded the 6.5 percent of GNP target by a small margin --notwithstanding higher-than-programmed expenditure-- and net public sector debt fell further to below 50 percent of GNP," noted the letter.

It said, "economic fundamentals and balance sheets have strengthened considerably in recent years, making the economy much more resilient to adverse shocks."

"We met the applicable external debt and net international reserve targets. End-December 2006 inflation, however, exceeded the outer band. CB has explained the reasons for the deviation and its policy response in a letter to the government which was also forwarded to Fund in accordance with the inflation consultation clause," noted the letter.

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