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. Last Updated: 07/27/2016

Turkey to Ask IMF For Another $9Bln

ISTANBUL, Turkey -- Turkey is seeking to secure billions of dollars in fresh funding in IMF or bilateral loans to bridge a 2002 financing gap stemming from economic contraction and global turmoil, government sources said Tuesday.

One source, who declined to be named, said one figure raised with the International Monetary Fund in talks last week was about $9 billion, but talks were continuing. The money would be needed to help cover the increased burden of debt payments resulting from continued high interest rates.

"But it is too early to say Turkey will get $9 billion. Everything will be clearer after talks with the IMF this week in Turkey. They want to see the 2002 budget," the source said.

Another source said Turkey and the fund were also discussing the possibility of deferring a $5 billion IMF loan repayment next year in addition to the fresh financing. Such a deferral would be allowed under a $15.7 billion rescue package agreed earlier this year.

An IMF team was to arrive in Ankara on Wednesday for talks on Turkey's 2002 budget ahead of the expected release of a latest $3 billion tranche of crisis loans.

Economy Minister Kemal Dervis was in Washington last week for talks with the IMF that did not produce any new commitments.

Officials say the IMF is urging Turkey to achieve a 6.5 percent primary budget surplus next year -- a tough target for the Turkish government, which is suffering a sharp economic contraction of around 8 percent this year.

They say the IMF is now also easing its pressure on Ankara to move to an inflation-targeting regime from next year to replace a crawling currency peg that collapsed in economic crisis in late February. The peg had aimed to slow inflation by stemming the liras' fall.

An inflation targeting scheme would authorize the central bank to use monetary mechanisms and interest rates to control Turkey's chronic high inflation, which hit 74.7 percent for wholesale prices annually in September.

Some Turkish economy officials have warned that Turkey should avoid a shift to inflation targeting until economic conditions improve.

The IMF and Ankara were in dispute over key inflation targets for 2002 last month. Turkey aimed at setting the target at around 35 percent, while the IMF wanted a figure of around 25 percent, officials said. Problems have only been exacerbated by global turmoil after the September attacks on the United States.

The government's High Planning Board, chaired by Prime Minister Bulent Ecevit and made up of senior ministers, plans to meet Thursday to approve the final budget draft, a key point of discussion in talks with the IMF.

The draft budget must be handed to parliament by Oct. 17, according to Turkey's constitution.