|low graphics version | feedback | help|
|You are in: Business|
Friday, 27 April, 2001, 17:36 GMT 18:36 UK
IMF backs Turkey aid deal
The International Monetary Fund (IMF) has agreed to back Turkey's latest plan for economic reforms with a $10bn loan package.
Speaking at the opening press conference of the IMF's spring meeting, the organisation's managing director Horst Koehler the IMF "stands ready to support Turkey".
Mr Koehler however warned that details of the loan and Turkey's economic programme had yet to be ironed out.
But in his key statement, Mr Koehler focused on the danger of the global slowdown of economic growth.
Global economy in trouble
"The world economy is going through a very difficult phase," he said. "Policymakers representing our 183 member countries are coming here... to discuss what needs to be done."
Mr Koehler's comments follow the release of the IMF's World Economic Outlook, which predicted that global economic growth in 2001 would be a full-percentage point lower than originally forecast - at about 3.2%, and well below last year's 4.8% growth rate.
"Our best guess is that there will be a marked slowdown but that it will be relatively short-lived," he said.
Fresh economic data published by the US government on Friday morning showed the US economy growing at a 2% annual rate - twice what analysts had expected, but this did little to temper Mr Koehler's remarks.
Growth is slowing - that is the point, Mr Koehler said, adding that no region was picking up the slack.
When asked how the slowdown in the US would affect neighbouring Mexico, Mr Koehler said there was no doubt that it would suffer. But, he added, Mexican President Vicente Fox and his administration continued to follow sound policies.
"Mexico will weather the storm, it will have to weather slower growth... but it will emerge stronger," Mr Koehler said.
During a press briefing on Thursday, IMF chief economist Michael Mussa told reporters that the European Central Bank (ECB) should do more to help the slowing world economy. Some viewed his comments as a sharp attack against the ECB.
Mr Koehler was more ambivalent. He praised Mr Mussa's ability as an economist but was not harshly critical of the ECB. "An interest rate cut in Europe could be helpful," he said.
IMF reform and poverty
Reform of the IMF and assistance to the world's poorest nations are also among topics to be discussed this weekend by fund members, Mr Koehler said.
"Highest on our agenda is further work on early warning of crises," Mr Kohler said. "Good policies are still the best precaution that member can take against crises.
Despite criticism by groups opposing the IMF's strategies for reducing world poverty, Mr Koehler pointed with pride to reductions in debt burdens among 22 nations through the controversial Heavily Indebted Poor Countries (HIPC) initiative.
Critics say HIPC is a failure and have called on the IMF to end the programme and cancel in total all debts owed by the poorest nations.
The IMF and World Bank's spring meeting is being held in Washington, DC and will run through Monday. Police and security officials here have readied themselves for the possibility of clashes such as those seen Quebec City last weekend.
A three-day meeting of Western Hemisphere nations there was marred by fiery protests with police responding with tear gas and over 400 arrests.