ANKARA, May 9 (Reuters) - Turkish Prime Minister Tayyip Erdogan said he cannot accept an IMF demand to rein in spending, in comments that cast fresh doubts over a major loan deal to revive Turkey’s ailing economy.
The government is in protracted talks with the International Monetary Fund on a lending pact that could be worth as much as $45 billion, seen as crucial to boosting investor sentiment as the economy slides into recession.
But the two sides have failed to seal an accord to replace a $10 billion deal which expired in May 2008. Disagreements over municipal spending have surfaced previously in the talks, which are being followed closely by markets.
“We cannot agree on some figures about revenues and spending on our budget. It is not possible for us to accept their suggestions for those figures. They tell us to decrease that figure, but we cannot do it because we need to continue our investments to create jobs,” Erdogan told state broadcaster TRT Turk in an interview late on Friday.
A wide cabinet reshuffle on May 1 that included the appointment of Ali Babacan as deputy prime minister in charge of the economy was received by markets as a sign the government wants to conclude those talks.
Turkish business leaders have long called for the IMF deal, citing the corporate sector debt obligations and necessity to kickstart economic reforms to restore investor confidence during the global credit crisis.
An IMF mission is expected to visit Turkey shortly to discuss a loan programme. (Reporting by Ibon Villelabeitia; Editing by Dominic Evans)