Turkey woos IMF with reforms

A financial crisis ripped through the economy last February

By the BBC's Jonny Dymond in Istanbul

Turkey is due on Friday to finalise a series of reforms to its banking system, deemed to be crucial if the country is to secure further loans from the International Monetary Fund (IMF).

The Turkish treasury said that the bulk of reforms became law late on Thursday and that the final directives would be published in Turkey's official gazette later on Friday.

The Turkish Government drove the reforms through despite the opposition of President Ahmet Necdet Sezer, who said that some of them were unconstitutional.

The government now believes it is back from the brink.

No guarantees

Seven days ago its carefully laid plans for banking reforms - which the IMF had insisted upon - were thrown into disarray when the bill which had been passed by parliament was vetoed by the president.

Such is the importance of the next stage of the IMF bail-out, to be decided on Monday, that the government sent the law unchanged back to parliament to override the veto.

President Sezer reluctantly signed a reform bill

Late on Thursday the president yielded, signing the bill into law.

There is no guarantee that it will be enough for the IMF, but there is every indication that about $12bn (15bn euros) will be made available to Turkey to help it reschedule its domestic debts.

This is in addition to the $19bn lent to Turkey over the last two years, making the country the IMF's biggest debtor.

And the pain is not over yet. The IMF's money will come with strings attacked, budget cuts and privatisations will be part of the package.

Turkey may have escaped debt default, but there are painful times ahead.