ABSTRACT
In 1977 Turkey's short-term arrangements for dealing with massive public expenditure in the context of a closed economy came crashing in on it, requiring the government to scramble for assistance from abroad. Demirel sought International Monetary Fund (IMF) advice regarding the implementation of austerity measures to deal with Turkey's foreign exchange crisis. After careful intermediation by German officials, talks between Turkey and the IMF were renewed in 1979 and a more stringent program was signed in the form of a $320 million, one-year stand-by with more ambitious demand management provisions. The IMF approached the initial negotiations with Turkey with scepticism, given the country's long-standing socialist traditions. The Organization for Economic Cooperation and Development (OECD) organized a series of reschedulings in conjunction with each of the IMF loans. The motives of the OECD members involved a mixture of political and economic motives, in that the OECD was interested in preserving Turkey's creditworthiness and economic stability.
