On October 7, Turkey’s National Assembly approved a government
resolution to dispatch 15,000 troops after details of the US loan were
hammered out in September during an annual IMF conference in Dubai. The
IMF had earlier rescheduled $6bn in debts owed by Turkey in 2003 and
2004 to 2005.
Iraq’s ruling council and the Kurds in the northern part of the country
have objected to the deployment. They regard the move as Turkish
efforts to revive the Ottoman Empire that ruled the Middle East for
more than 500 years.
The low-interest US loan, which will be available starting in January,
has a maturity of 10 years with a four-year grace period. It replaces a
bigger package that Turkey forfeited in March when it refused to permit
US troops to use its territory as a launching pad for an invasion of
Iraq.
Turkey’s economy continues to improve, with interest rates falling,
signs that inflation is being reined in following the Iraq war and the
lira revaluing against the dollar and the euro in real terms.
Bolstered by IMF loans totalling $31.5bn, Turkey’s economy grew 7.8% in
2002. That was a sharp turnaround from 2001, when it declined 9.4% in
the biggest drop since World War II, according to the State Institute
of Statistics. GDP growth in the first quarter of 2003 was 8.1%, making
Turkey the world’s second fastest growing economy after China.
Year-on-year inflation, based on consumer prices, was 24% at the end of September, the lowest figure in 26 years.
Exports rose 30% in the first five months of 2003 to $17.778bn from
$13.666bn in the same period in 2002, while imports rose 31.3% to
$24.784bn.
The lira remains strong against both the dollar and the euro as the
foreign exchange reserves and gold reserves of the Central Bank of
Turkey in mid-September reached a record $33.5bn, enough to meet nine
months of imports without remittances from Turkish workers living
abroad and hard cash earnings from exports and tourism.
Overnight interest rates in September fell to 29%, the lowest figure in
two decades, and the Istanbul Stock Exchange 100-Index rose 50% in the
first nine months of 2003, as scores of cash-hungry, family-owned
companies prepared to go public.