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Turkish Economy Minister Mehmet Simsek said the government would accept close International Monetary Fund monitoring of its economic program after its current $10 billion loan agreement expires next month.

Turkey may sign an accord with the IMF that would make loans available should the country need them, entailing “significant conditionality'' and sending “almost as strong a message'' to investors as renewing the present credit accord, Simsek said in an interview in Ankara today.

A fresh agreement with the fund will signal that the ruling Justice and Development Party remains committed to IMF-backed economic policies such as selling government industries, even as prosecutors try to close the party, Simsek said.

Prosecutors are seeking to shut down Prime Minister Recep Tayyip Erdogan's party for Islamist activities. That is raising investor concerns that the political conflict will deflect government attention from an IMF-backed economic program to contain inflation and restrict public spending that's helped attract record foreign investment.

Standard & Poor's yesterday cut its outlook on Turkey's credit rating citing “fraught'' domestic politics as well as global market conditions.

Slower Pace

“It's business as usual: it may be relatively slower or more difficult but reforms are always difficult,'' Simsek said, citing the overhaul of the pension system that's currently in parliament. “The fact that we are passing an unpopular but fundamentally good and right reform is the single best proof.''

IMF officials are due to start talks in Ankara today on releasing a final $3.6 billion loan under Turkey's current agreement quick payday loan paydayloans.com.

The alternative to the precautionary standby agreement with the IMF that Turkey is considering is an accord under which the fund inspects the economies of countries that owe it more than their normal borrowing allowances. Such an arrangement would be a “relatively weaker commitment,'' Simsek said.

Simsek said the overhaul of the pensions system was “fundamentally intact'' even after the government softened some of the planned changes to avert a strike by labor unions. The reform is still “first rate,'' he said.

Without the measures, which raise the retirement age to 65 for men and women and increase workers' contributions, the pension system would accumulate a deficit of $1.8 trillion by 2075, Simsek said. The reform as originally drafted aimed to reduce the gap to less than a third of that and the revised version of the law will come close to that target, he said.

The government will press ahead with a program of asset sales this year, he said. Turkey is offering electricity distribution and generation networks, rights to operate bridges and highways and a stake in telephone company Turk Telekomunikasyon AS.

The sale of Turkiye Halk Bankasi AS may be more difficult to complete because of the financial troubles of global banks, Simsek said.

“It takes two to tango,'' Simsek said of the Halk Bank sale. “Market conditions are of course relevant.''

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