Jun 06 2019

IMF head says Turkey’s Erdoğan not eager to ask for assistance

The head of the International Monetary Fund (IMF), Christine Lagarde, said despite the distressing economic situation in Turkey, President Recep Tayyip Erdoğan was not eager to ask for IMF assistance, Greek daily Kathimerini English reported

Turkey is struggling to cope with inflation of around 20 percent, high unemployment a weakened currency.

“I hope the authorities can actually handle the situation. They have a teeny bit of fiscal space, they have a private sector that is massively indebted, they have inflation running high, they have a currency situation which is also pretty dire and I don’t think that President Erdoğan would actually pick up the phone to ask me whether the IMF can come and help," Kathimerini quoted Lagarde as saying. 

The IMF in May called on Turkey to ensure that its economy and financial markets were stabilized. It said it had “no indication from the Turkish authorities that they are contemplating a request for financial assistance”.

Desmond Lachman, an ex-deputy director of the IMF said last month that Erdoğan was giving other political leaders a lesson in how to mismanage a currency crisis.

Many economists say Turkey needs IMF assistance to overcome its economic problems, but the government is adamant about not going to the IMF. 

The lira hit record lows in August and fell by 28 percent last year against the dollar and a further 10 percent since January.

Official data published last month showed the economy grew by 1.3 percent quarter-on-quarter in the first three months of this year, marking the end of a recession, while it contracted 2.6 percent on an annual basis.

Fitch Solutions said in a report published on Monday that it expected Turkey to return to recession and the economy to contract 1.9 percent in 2019.