Happy Friday: IMF Loses Turkey as a Borrower
By Sameer Dossani | 50 Years Is Enough
Today's news that Turkey is unlikely to renew its standby agreements with the IMF is huge. As many of you will remember, back in 2003, the IMF was receiving more than 60% of its revenue from interest repayments from its four major clients - Brazil, Argentina, Indonesia and Turkey. The first three of those four were unhappy enough with the IMF that they did not renew their loans and even went so far as to repay outstanding debt early, thereby saving themselves considerable interest payments. These moves were enough to precipitate a serious financial crisis for an institution that has had its hand in nearly every major financial crisis around the globe since 1980.
In April, the IMF announced that it would be cutting 15% of its staff and selling $11 billion worth of gold as part of its own "structural adjustment" program; the institution's budget had already decreased by about 20% since 2005. The IMF's financial plan will likely have to be revised yet again - and further budget austerity measures put in place - if they lose their last major client. And if Turkey goes one step further and repays its debt early (like Brazil, Argentina and Indonesia before it) this could signal the end of the end for an institution that once dictated economic policies the world over.
The New York Times:Resenting Austerity, Turks Want No New IMF Deal
ANKARA (Reuters) - Consensus is rare in Turkey, but no one seems to like the IMF.
With the country due to end its loan agreement with the International Monetary Fund on Saturday, a view is building that after 19 standby agreements since 1961, it is time Turkey cut the ties and stood on its own economic feet.
"The IMF forced Turkey to sell its profit-making banks. Soon there will be nothing to sell. What will we leave to our children?" said Mustafa Koc, 47, standing in front of dozens of Turkish flags which he sells in Ankara's central Kizilay area.
Check out Sameer's blog at shirinandsameer.blogspot.com.
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