IMF chief visits troubled Turkey

The collapsing lira has depressed the Turkish retail market

The deputy managing director of the International Monetary Fund (IMF), Stanley Fischer, has arrived in Ankara for talks on Turkey's continuing economic crisis.

Ahead of Mr Fischer's visit, the IMF was keen to dismiss speculation that the Fund was still concerned about the progress of its $8bn (£5.6bn) rescue programme.

"Don't think that there are serious problems with the programme and that Fischer has come to solve them," Michael Deppler, the IMF's European department director, told the Milliyet newspaper on Friday.

After arrival, Mr Fischer was equally downbeat.

"We see no major changes taking place in the programme... the programme has been set, it's being carried out and there are no major changes envisaged," he said.

According to speculation in local media, Mr Fischer is planning to discuss ways of limiting the fluctuation of the Turkish lira.play down the significance of the talks.

The lira has lost half its value against the US dollar since Turkey first lurched into crisis in February.

Signs of hope

Mr Fischer's visit comes at a time of comparative optimism for the Turkish economy.

Mr Fischer: Tight-lipped on talks

Communications minister Enis Oksuz, a key opponent of IMF-sponsored reforms, resigned from the government on 17 July.

And on Friday, the Turkish Treasury announced that it had successfully completed a $500m bond issue, a key measure of confidence as it attempts to pay down about $18bn in state debt.

In all, the bond issue was more than four times oversubscribed, the treasury said.

On 12 July, the IMF agreed to resume lending to Turkey, 10 days after freezing its programme because of concerns over the slow pace of reform.

Fisching for ideas

Most speculation ahead of Mr Fischer's visit has revolved around adjustments to the currency regime.

Mr Dervis: Measures to boost the lira

On Thursday, economy minister Kemal Dervis said the government planned to encourage Turks to keep their savings in lira, rather than foreign currencies.

The main incentive was the introduction of a new, lower tax regime for long-term lira savings, and tax exemptions on lira bonds.

Although Mr Dervis was keen to portray the changes as "technical", they have sparked rumours of a tightening of controls on the exchange rate, just months after the lira was allowed to float freely.

Prime minister Bulent Ecevit said on Thursday he would discuss with Mr Fischer ways to smooth problems caused by the floating-rate currency system.

So far, the IMF has refused to countenance talk of any changes to Turkey's exchange rate regime.