Turkey claims stronger debt position after fall in interest rates

ANKARA, Jan 14 (AFP) - Turkey said Friday it had increased control over its hefty debt burden after a significant fall in interest rates last year thanks to a strict economic recovery programme backed by the International Monetary Fund (IMF).

"In 2004, we adhered to the economic programme with determination and gave no concessions on fiscal policy ... There are no longer any concerns on debt rollover," Economy Minister Ali Babacan told a press conference here.

The minister said that the internal borrowing rate on the local currency had gone down to an average of 24.7 percent in 2004 compared to an average of 62.7 percent in 2002 when the country was struggling with its worst recession in decades.

Turkey has since made considerable improvement under a programme of far-reaching reforms in return for a 16-billion-dollar loan from the IMF.

"Interest rates in secondary markets have decreased to below 20 percent. These rates are the lowest in the history of the Turkish treasury. They constitute a record," Babacan said.

According to preliminary figures, Turkey's total borrowing in 2004 stood at 159.5 billion New Turkish Liras -- or YTL -- (about 117 billion dollars, 90 million euros).

Its total debt service, meanwhile, was at 183.9 billion YTL.

The proportion of the total gross debt in the consolidated budget to gross domestic product was expected to come in at 74.5 percent, 4.8 percentage points less than the figure for 2003.

The proportion of the net public debt to GDP, meanwhile, was expected to be around 64-65 percent, about 6.5 percentage points less than the figure in 2003.

Babacan said the treasury was planning on total borrowing of 172.6 billion YTL and total debt service of 200.3 billion YTL in 2005.

"In 2005, we will continue to work towards the target of decreasing the cost of borrowing and extending maturity," he said.

In a bid to strenghten its economic recovery, Turkey last month completed talks on a new stand-by deal with the IMF worth 10 billion dollars.

The deal is expected to be approved by the IMF board once Ankara sends to parliament three key draft laws regarding financial services, social security and tax administration.