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Former IMF Official Regrets 'Insufficient' Aid Program

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IMF's Turkey program in the early 2000s was not financed with enough money, former IMF official says

The International Monetary Fund (IMF) could have done more to help Turkey get out of the 1999-2001 financial crisis, said a former IMF official.

In an interview with Anadolu Agency, Carlo Cottarelli, former IMF mission chief to Turkey, praised will of the Turkish people, which he said paved the way for "tremendous growth" in the country's economy.

His remarks came a day ahead of the fourth anniversary of Turkey’s payment of the last installment of its debt to the IMF.

Cottarelli praised the political stability and fiscal discipline in Turkey, saying that the growth was "particularly strong in the last 10 years," which he attributed to the strength of the nation's people.

"What was surprising was the resiliency of the Turkish people, the Turkish population, to go ahead with the adjustment needed to turn the economy around in 1999.

"Then things started going well in a more solid and stable way. So, it was all due to the resiliency of the Turkish people and the Turkish enterprise that things changed," Cottarelli said.

In his remarks, Cottarelli said inflation in the country has come down significantly, fiscal accounts have got much stronger, and public debt to GDP ratio was now much lower and stable.

The former IMF official, however, warned that the external deficit continued to remain quite large, which he said would expose Turkish economy to speculative pressures.

Limited financing

He asserted that the IMF could have done more to help Turkey in the early 2000s and added:

"I think that initially the program was not financed with enough money from the IMF. We started a program with very limited financing."

The initial amount of the loan made available for Turkey, as a part of the IMF standby agreement in 1999, was $4 billion over three years.

"That was clearly insufficient," said Cottarelli.

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