ANKARA Turkey's Prime Minister Tayyip Erdogan said on Tuesday that he would voice concern during a Group of 20 summit in Korea over the U.S. Federal Reserve's plans to print money as part of its monetary strategy.
Erdogan, in an interview with Reuters, also said that having weathered the international economic crisis with sustained growth, Turkey should be able to repay its remaining debt to the International Monetary Fund in 2012.
He said less developed countries would suffer the consequences of the United States' decision to attempt to stimulate its economy by cash injections.
"If those who have power apply such a policy it is even a bigger danger," Erdogan said, when asked whether he would raise concerns over the Fed's strategy.
The Fed's planned quantitatitive easing, dubbed the QE2, involves printing money to buy $600 billion of government bonds. The move could depress the dollar and destabilise the flow of funds to emerging markets.
"In order to rescue the countries from forex pressure the remedy cannot be printing money, this will have repercussions for developing countries and least developed countries," Erdogan said. "And this is not a fair approach and Turkey cannot say yes to such a development."
Erdogan also spoke of the need to reorganise both the International Monetary Fund and World Bank, and said there was a global debate on what should be the "determinant currency" for monetary policy and the role of gold.
Turkey's Economy Minister Ali Babacan warned last week that the Fed's strategy risked doing more harm than good.
Erdogan said developed countries should observe fiscal discipline and adopt financial policies based on stability and confidence.
Turkey had undergone an economic transformation since an economic crisis in 2000/01 and leapt from being the 26th largest economy eight years ago to the 11th spot, thanks to such policies, Erdogan said. The Turkish premier also said that not only had Turkey done without an IMF standby agreement for the past three years, but he also expected to wipe out remaining debts to the IMF in 2012.
"Eight years ago we had a debt of 23.5 billion dollars, right now the money that we owe to the IMF is 6 billion dollars," Erdogan said. "And I guess toward the end of 2012 we will finish all our debts."
The prime minister also rejected any notion that his government would loosen purse strings in advance of an election expected in June.
"We are not considering a budget in line with the election. We have decided to follow the same path," Erdogan said.
He said the inflow of foreign capital to the real sector was more important to Turkey than money coming into the country's booming stock market.
"In a country where the free market philosophy is adopted you cannot of course question why the capital is flowing into the country," Erdogan said.
Turkish stocks have risen 34 percent so far this year, and the benchmark index closed at 71,543.26 points on Tuesday, compared with 11,000 when Erdogan's AK Party took office in 2002.
Turkey was the fastest growing economy in Europe and third fastest worldwide, Erdogan said, based on the 11 percent growth notched in the first half of the year.
(Editing by Ralph Boulton)