Annex A

Table 1. Turkey: Performance Criteria on the Net Domestic Assets of the Central Bank of Turkey

	Ceilings (In trillions of lira)
Outstanding NDA as of January 11, 2001:	281
January 31, 2001 (performance criterion) 1/	900
February 28, 2001 (performance criterion) 1/	0
March 31, 2001 (performance criterion) 1/	0
June 30, 2001 (performance criterion) 1/	0
September 30, 2001 (indicative ceiling) 1/	350
December 31, 2001 (indicative ceiling) 1/	650
1/ The compliance with the performance criterion (indicative target) shall be based on the average of the stocks prevailing during the five working days immediately preceding each of these dates.

1.  The net domestic assets (NDA) of the Central Bank of Turkey (CBT) are defined as base money less the net foreign assets of the CBT valued in Turkish lira at end-month actual exchange rates.

2.  Base money is defined as currency issued by the CBT, plus the banking sector’s deposits in Turkish lira with the CBT.

3.  Net foreign assets of the CBT are defined as the sum of the net international reserves of the CBT (as defined in Annex F of the Letter of Intent (LoI) dated December 18, 2000), medium-term foreign exchange credits (net), and other net foreign assets (including deposits under the Dresdner scheme of original maturity of two years or longer). As of September 30, 2000, net foreign assets of the CBT amounted to TL 6,776 trillion.

4.  The cumulative net change in the devaluation account from its balance at end-1999 (excluding any distribution–in cash or through the write-off of government paper held by the CBT or by any other mean–of unrealized foreign exchange profits) will be subtracted from the end-period NDA stock as calculated above.

5.  NDA ceilings will be adjusted for any change in the definition of the aggregate to which the reserve requirement applies according to the following formula:

where:

R denotes the 4 percent reserve requirement plus the 2 percent liquidity requirement coefficient and
denotes the change in base generated by a change in the definition of the reserve aggregate. Neither this coefficient nor the averaging period will be changed during 2001.

6.  The NDA ceilings will be adjusted downward for any waiver of reserve requirements for any additional bank intervened by the BRSA. The adjustment will be equal to the existing reserve requirement coefficient times the amount of liabilities at these banks subject to reserve requirements.

Table 2. Turkey: Performance Criteria on Net International Reserves

1.  Net international reserves of the Central Bank of Turkey (CBT) comprise its gross foreign assets excluding encumbered reserves less its gross international reserve liabilities plus the net forward position of the central bank, denominated in U.S. dollars. Encumbered reserves are reserves that are not readily available.

2.  For the purpose of the program, gross foreign assets are all short-term foreign (convertible) currency denominated claims on nonresidents, monetary gold valued at the November 30, 2000 average London fixing market price of US$269.05 per troy ounce, foreign bank notes, balances in correspondent accounts, and any reserve position in the IMF. At present encumbered reserves consist of foreign asset holdings in accounts of the Turkish Defense Fund (amounting to US$426 million on November 30, 2000). The special Dresdner portfolio (amounting to US$898 million on November 30, 2000) is also encumbered, but is not subtracted from foreign reserves given the overlap with one-year foreign currency denominated liabilities (see below). Reserve assets as of November 30, 2000 amounted to US$19,428 million.

3.  Gross international reserve liabilities include all foreign currency-denominated liabilities to nonresidents with an original maturity of up to and including one year, reserves against foreign currency deposits of the banking sector, claims from central bank letters of credit, overdraft obligations of the central bank, and liabilities arising from balance of payments support borrowing irrespective of their maturity (including liabilities to the IMF). On November 30, 2000 reserve liabilities thus defined amounted to US$8,331 million.

4.  The net forward position is defined as the difference between the face value of foreign currency-denominated central bank off-balance sheet (forwards, swaps, options, and any future contracts) claims on nonresidents and foreign currency obligations to both residents and nonresidents. As of November 30, 2000 these amounts were zero.

5.  All assets and liabilities denominated in foreign currencies other than the U.S. dollar will be converted into U.S. dollars at the program cross rates specified in Annex J in the Letter of Intent dated December 18, 2000.