Turkey's parliament on Saturday reduced the budget allocations of most ministries by up to 16 percent to cut overall spending as the country seeks a loan deal with the International Monetary Fund, according to AP. Parliament voted 324-117 to save around 5.5 billion liras ($3.6 billion) in the 2009 budget. That is expected to please an IMF delegation due to arrive in Ankara early January. The IMF has long been urging Turkey to cut spending. The budgets of the defense, justice and transportation ministries were excluded. Turkey hopes to complete the talks with the IMF during January and secure a loan of some $25 billion. Turkey has to repay around $50 billion of foreign debt within a year. Central Bank Gov. Durmus Yilmaz on Saturday said Turkey's banking sector was sound thanks to an overhaul of the banking system following a deep financial crisis in 2001. But authorities were pondering how to address a sharp slowdown in the economy amid layoffs and production halts particularly in the country's leading automotive and textile industries. «Today, the debate is whether Turkey needs to use its resources to help producers,» Yilmaz said. The slowdown may push the central bank to further cut interest rates. The overnight lending interest rate between banks now stands at 17.5 percent. However, the Parliament on Saturday did not revise some key official projections for 2009, including a target of a 27 percent rise in exports and an ambitious 4 percent growth in gross domestic product. A recent report by the Organization for Economic Cooperation and Development said Turkey's growth rate is expected to decline to below 2 percent next year. «The budget projections are based on the assumption that there will be no recession in the economy,» said Esfender Korkmaz, a lawmaker from the main opposition Republican People's Party. «The global crisis has not been taken into account.» Korkmaz criticized the government for basing budget calculations on an exchange rate of 1.41 liras to the dollar, which he said could cause problems if the lira slides further. One dollar traded at 1.49 liras on Saturday. Turkey's economy has been plagued by a current account deficit, and GDP growth slowed in the third quarter to a rate of only 0.5 percent. Still, the growth rate in the first nine months reached 3 percent. The jobless rate stood at 10.3 percent in September. On the other hand, the Turks have been increasingly complaining about price hikes, including a more than 22 percent increase in the price of natural gas, which is widely used for heating homes in winter. Dozens of leftists on Saturday protested against the government in the capital Ankara and the eastern city of Van, the state-run Anatolia news agency reported.
