IMF programs and financial liberalization in Turkey

By examining the Fund's views about macroeconomic stability, the effectiveness of IMF-supported stabilization programs, and Turkey's macroeconomic policies, this paper demonstrates that both the IMF and Turkey share the responsibility for the outcome of stabilization programs. The main conclusion of the paper is that the primary targets Of stabilization programs are not implemented during the program years. Even though program years are associated with improvements in balance of payments and reserves, such improvements disappear during the post-program years. The fact that Turkey has received subsequent programs from the IMF despite the overall lack of implementation of the Fund's conditionality may be consistent with the existence of moral hazard In fact, the results suggest that, on average, Turkey enters the next program in worse macroeconomic condition than the previous program.