Turkey would finish paying off its debt to International Monetary Fund (IMF) on Tuesday, a first in 19 years, Deputy Prime Minister Ali Babacan said Monday. "For the first time in 19 years, we are entering a period when we are free of debt to IMF," Babacan said. "We will enjoy a historic day tomorrow." Turkey has entered into 19 stand-by arrangements with IMF since 1960 when it first requested financial help from the fund, Babacan said, with most of these agreements not fulfilled the way they were planned, providing little benefit in the process.
Turkey faced its highest debt level to IMF in the years 2001-02 when it borrowed 11.2 and 13.5 billion dollars respectively. The country has not used any credit lines from IMF since 2008.
Babacan said the government decided against signing another deal with the fund in 2009 despite high anticipation from the markets. "If Turkey had chosen to adopt a populist attitude then, it might have brought harm on itself."
The environment of trust prevalent in Turkey has allowed it access to the resources it needs as they flow into the country through private sector, Babacan said.
Turkey's $5 bn aid has symbolic meaning
Turkey's pledge to contribute 5 billion dollars to IMF's reserves, which the fund intends to enlarge so as to cushion the effects of future financial crises, is more significant symbolically rather than as financial aid, Babacan said.
"This contribution is fairly small in relation to the size of our economy and cash reserves," Babacan said. "Its symbolic value is more important."
Working in Turkey boosted credentials of the IMF staff, Babacan said, many of whom later occupied high-ranking positions within the organization after their experience in the country.
Turkey's credit ratings were much lower than it deserves, Babacan said, adding present economic indicators pointed that Turkey should be rated at the investment grade level.
Fitch deems Turkey 'investable' at BBB-, while ratings by Standard&Poor's and Moody's credit agencies are one notch below the investment grade.