IMF tells Turkey: Democracy is crucial to economic stability

Sunday 17/07/2016
Obstfeld: Authorities have stepped in very effectively

WASHINGTON - Following the Turkey's bloody coup attempt at the weekend, the International Monetary Fund on Tuesday said the country's democratic institutions were crucial to its economic stability.

But the IMF praised authorities' handling of economic policy to stave off instability in the wake of Friday night's dramatic events, which reportedly left hundreds dead.

"We think first of all that, aside from the inherent value of democratic institutions, it's very important to preserve them in Turkey," IMF research director Maury Obstfeld told reporters in Washington.

"That has been one of the foundations of the economic accomplishments that the country has made over several years and we wouldn't want to see those endangered."

Obstfeld however said Turkish authorities had acted properly in shielding the local economy from shocks.

"The Turkish authorities, particularly the central bank, have stepped in very effectively to provide liquidity and we would anticipate in our baseline that things will settle down."

European and American leaders have reacted with alarm as Turkish authorities since Saturday have arrested 7,500 people, suspended twice as many state education workers and reportedly also rounded up hundreds of judges and prosecutors.

In televised remarks, Turkish premier Binali Yildirim said Monday that authorities in Ankara would "act within the law" to bring an end to the crisis.

The IMF on Tuesday predicted that the British vote to exit the European Union would reduce global economic growth by 0.1 percentage points through next year.

The forecasts were finalized prior to the attempted coup. Global equities markets have not so far suffered losses in its wake.