IMF approves $16bn for Turkey

Turkey has become the IMF's biggest debtor

The International Monetary Fund (IMF) has approved a $16bn economic package for Turkey, the third major aid program for Ankara in under two years.

The latest cash will be used to bridge a budget shortfall this year as Ankara struggles with its worst recession in more than 50 years.

The loan reportedly comprises $12bn in new funds and unfreezes $4bn from an existing loan, making Turkey the IMF's biggest ever borrower.

"It is $12bn in additional financing," an IMF board member told Reuters.

Turkey was plunged into economic crisis a year ago when a political dispute between the president and prime minister undermined the confidence of international investors.

The Turkish Lira plunged by almost 50%, inflation soared by about 80%, and hundreds of thousands lost their jobs.

Big lender

Turkey will be committed to repaying $31bn to the IMF, including £19bn in previous lending, topping the $22bn lent to Argentina.

The 'stand-by credit' allows Turkey to draw up to $9bn immediately and the rest will be released over the next three years.

The IMF said in a statement that its executive board approved the credit "to support the government's economic program for 2002 to 2004."

To secure the new loan, which involves funds previously pledged to Turkey by the IMF, Turkey's government enacted several economic reforms.

Economy minister Kemal Dervis said the IMF would not have approved the new loans had Turkey "not been able to stick to our fiscal targets".

"We will not need this kind of large-scale financing after 2002, but our relations with the IMF and the World Bank are ongoing," Mr Dervis said.