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Turkey - The Speech Delivered by Mr. Ali Babacan

Distinguished Press Members, As you all closely follow, we started our studies on a new medium term economic program in the spring months of this year. The Pre-accession Economic Program which is the first product of these works was submitted to European Union and announced on December 1 2004.

Our discussions with IMF on a new stand-by arrangement, built on our medium term economic program, has been ongoing for some time. These discussions are completed as of
last night and we reached an agreement on the broad of a draft letter of intent. Distinguished Guests, In the more than two years time since our government took office in November 2002, an impressive economic performance was recorded and a historic success was achieved.

In this period, by unleashing our economic potential, we generated strong growth rates. For the first time after more than thirty years, inflation was pulled down to single digits.
Budget deficit to GNP ratio is projected to decline from its level of 17% in 2001 to 8% as of end-year 2004. We managed to decrease the average TL borrowing rates, by nearly 50 percentage points, from its level of 70.6% in October 2002 to the current level of around 20%.

The net public debt to GNP ratio is expected to decline from its 91% level in 2001 to well below 70% in 2004. Apart from these developments in macroeconomic indicators, the resilience of Turkish economy to internal and external shocks has significantly improved and our achievements in many areas have been strengthened with the fundamental structural reforms.

Distinguished Press Members, I am delighted to see that even the most optimistic projections have been exceeded during these two years.

At the same time, we witnessed that the pessimistic scenarios were proved unvalid as well as calls for crisis and negative forecasts came to nothing. Today, the people who make news, comments, research or analyses regarding the Turkish economy have to change their parameters and point of views. The economic targets are realistically set, policies are strictly and decisively implemented, and even a narrowest of deviations are not permitted.