Turkey will not Sign IMF Deal Until Early Next Year [Opinion]

23 October 2009 - UK - An IMF deal is unlikely this year. I believe that Erdogan will now wait until all the numbers have been crunched on Turkey's economy, and are unlikely to agree a deal with the IMF until early next year.

Negotiations between Turkey and the IMF have been unsuccessful in reaching an agreement on a new deal, since the old one expired in May.

According to analysts, including the head of the IMF Dominique Strauss-Kahn himself, the Turkish economy can survive without IMF assistance. The question is on whether it can grow, by having extra to spend on things like marketing campaigns to increase tourism, and developing the tourism infrastructure.

SunExpress, the Turkish budget airline has posted a 5.2% increase in profits in the first 9 months of the year. The firm has also said that it will launch new flights from October 25th from Istanbul to Zurich, Hamburg, Nurnberg, Dusseldorf and Dortmund.

The increase in profits for SunExpress confirms that the Turkish economy is coping very well with the downturn, according to expert on the market Julian Walker, director of UK based Turkish property agent Spot Blue.

"There is a direct correlation between overseas travel, economic stability and consumer confidence. Overseas travel from the UK has been dropping since the recession set in, and while SunExpress's figures are not an accurate representation for the entire Turkish market they do indicate increasing overseas travel among the Turkish middle classes," he said.

Erdogan does not want to sign a deal with the IMF unless he really needs to, because it will be damaging to the role he wants for his country as a regional, and hopefully eventually a global power.

Turkey has been busy making peace with all its neighbours that it had bad relations with, since Erdogan's Justice and Development party took office seven years ago, to gain the respect of the developed world, and so that it can take the role of mediator in regional disputes -- a key role of regional powers.

However, one of the core principles of the Erdogan government is that no foreign policy can be enacted until there is peace and harmony within your own borders, and this is a goal they have strived hard to achieve. Recently the government of Recep Tayyip Erdogan took steps to meet some of the major concerns of Turkey's Kurdish minority as part of an effort to launch national reconciliation and end decades of friction and civil strife. This is one of the hardest goals to achieve.

Turkey really wants to be a member of the European Union, and an IMF deal is perceived as damaging that aim directly, and indirectly, because becoming a regional power is also partly to help secure EU admission.

However, economic stability is also very important for EU admission, and also domestically to stay in office. So if Turkey's tourism is not growing well enough, and spending is needed on that or anything else to keep the economy growing then Erdogan will sign on with the IMF. Like I say, I think it will take until at least the beginning of next year for whether it is necessary or not to become clear.

Spot Blue is one of the UK's largest Turkish property agents, with property for sale in Turkey priced from £25,000.

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