US embassy cable - 03ANKARA1499

UNCLAS ANKARA 001499 
 
SIPDIS 
 
 
SENSITIVE 
 
 
STATE FOR E, EB AND EUR/SE 
TREASURY FOR OASIA - MILLS AND LEICHTER 
NSC FOR QUANRUD AND BRYZA 
 
 
E.O. 12958: N/A 
TAGS: EFIN, PREL, TU 
SUBJECT: TURKISH ECONOMY MARCH 10:  AD REF AGREEMENT ON 
LOI; MARKETS SERENE 
 
 
1.  (SBU) IMF ResRep advised this morning that Fund staff and 
GOT officials had reached ad ref agreement on a Letter of 
Intent, and that IMF Mission Chief had returned to Washington 
with the draft.  We do not have details yet, but understand 
from ResRep that the two sides reached a compromise agreement 
on direct tax reform (based on a revised draft of the 
legislation), and on reducing redundant positions in State 
Enterprises (GOT agreed to pass decrees eliminating obstacles 
to laying off SEE employees).  The GOT is still talking with 
the World Bank about how to resolve the issue of direct 
income payments to farmers in the budget, but Fund staff 
apparently decided this should not be an obstacle to 
proceeding. (Note:  World Bank Country Director Ajay Chhibber 
was quoted in the press at mid-day today as saying the Bank 
could not accept the budget, which he labeled "anti-poor," 
and would not proceed with its planned $1.375 billion loan 
unless the budget was changed.  End Note) 
 
 
2.  (SBU) Fund staff hopes to work out some smaller issues 
over the next 7-10 days via e-mail.  Then, the key question 
will be enactment of the 2003 budget.  Finance Ministry and 
Parliamentary sources told us today that the Planning and 
Budget Commission is scheduled to complete work on the budget 
on March 16.  The full Parliament could begin debate on the 
budget as early as March 17.  This debate normally takes 
10-11 days (i.e., approval around March 28), though the 
government could make a political decision to limit debate in 
hopes of enacting the budget sooner. 
 
 
3.  (SBU) Markets remained calm this morning.  The lira 
strengthened to TL 1,608 million/dollar in the interbank 
market.  Yields on the benchmark 1/24/04 t-bill fell slightly 
from 57.68 to 56.9, and the stock market rose 0.10 percent. 
PEARSON