Turkish CB positive on IMF, market sees loan deal

By Paul de Bendern and Alexandra Hudson

ISTANBUL (Reuters) - Turkish Central Bank Governor Durmus Yilmaz said on Monday he would welcome some form of arrangement with the International Monetary Fund, adding to growing calls for the government to strike a deal with the fund.

Turkish business leaders have called on the government to secure another loan deal with the IMF to help limit the fallout from the global financial crisis that has already forced Ukraine, Iceland and Hungary to seek help.

Turkey's last standby loan deal with the IMF expired in May and IMF officials are currently in Ankara for post-programme monitoring and talks on a possible follow-up deal.

"At this stage we do not need IMF cash... but there is uncertainty about what we will face in the coming term. So, we view it as useful to make some arrangements to give confidence to international markets," Yilmaz was quoted by state-run Anatolian news agency as saying in northern Cyprus.

"But this is a political decision and up to the government," he added.

Turkish shares have fallen more than 50 percent this year and in the last three weeks alone the lira currency has lost a third of its value against the dollar. The benchmark bond yield is also trading at a new four-year high.

Analysts say they expect an announcement on a follow-up deal as early as next week as the government was no longer able to drag its feet over what kind of deal it would make given market turmoil. Turkey must agree on some form of arrangement as it still owes the IMF $9.3 billion.

The lira gained some ground against the dollar because of increasing expectations of a new deal, analysts said. The lira stood at 1.6840 against the dollar at 1220 GMT.