mic performance
through most of the 1980s, Turkey continues to suffer through its most
damaging economic crisis in the last 15 years. Sparked by the
downgrading in January 1994 of Turkey's international credit rating by
two US credit rating agencies, the crisis stems from years of loose
fiscal and monetary policies that had exacerbated inflation and
allowed the public debt, money supply, and current account deficit to
explode. In April 1994, Prime Minister CILLER introduced an austerity
package aimed at restoring domestic and international confidence in
her fragile coalition government. Three months later the IMF endorsed
the program, paving the way for a $740 million IMF standby loan.
Although the economy showed signs of improvement following the
stabilization measures, CILLER has been unable to overcome the
political obstacles to tough structural reforms necessary for
sustained, longer-term growth. As a consequence, the economy is
suffering the worst of both worlds: at the end of 1994, inflation hit
a record 126% (annual rate), and real GDP dropped an estimated 5% for
the year as a whole, the worst decline in Turkey's post-war history.
At the same time, the government missed key 1994 targets stipulated in
the IMF agreement: the budget deficit is estimated to have overshot
the government's goal by 47%; the total public sector borrowing
requirement likely reached 10%-12% of GDP, rather than 8.5% called for
in the program; and the Turkish lira's value fell 5% to 7% more than
expected. The unprecedented effort by the Kurdistan Workers' Party
(PKK) to raise the economic costs of its insurgency against the
Turkish state is adding to Turkey's economic problems. Attacks against
tourists have jeopardized tourist revenues, which account for about 3%
of GDP, while economic activity in southeastern Turkey, where most of
the violence occurs, has dropped considerably. Turkish officials are
now negotiating a new letter of intent with the IMF that will
stipulate more realistic macroeconomic goals for 1995 and allow the
release of remaining funds of the standby agreement.

National product: GDP - purchasing power parity - $305.2 billion (1994
est.)

National product real growth rate: -5% (1994 est.)

National product per capita: $4,910 (1994 est.)

Inflation rate (consumer prices): 106% (1994)

Unemployment rate: 12.6% (1994)

Budget:
revenues: $28.3 billion
expenditures: $33.3 billion,