Daily Sabah

IMF says fiscal tightening needed in Turkey

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Dec 18, 2010 - 12:00 am GMT+3

by Dec 18, 2010 12:00 am

The International Monetary Fund said on Friday that Turkey should tighten fiscal and regulatory policies to keep price pressures at bay, and may need to raise interest rates if those tools do not work.

In a report by IMF staff conducting an annual review of Turkey's economy, the fund said Turkey needed to keep its eye on capital inflows that would keep domestic demand strong and the country's current account deficit elevated next year.
"A combination of macroprudential and fiscal tightening, and a rebalancing of foreign currency purchases with liquidity withdrawal, underpinned by structural reforms to improve competitiveness, is warranted," the report said.

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