Table 3. Turkey: Performance Criteria and Indicative Targets for the Monetary Base

of the Central Bank of Turkey 1/

(in trillions of Turkish Lira)

	Ceilings	Actual
Outstanding base money as of April 30, 2001	5,850	5,850
May 31, 2001 (indicative ceiling)	5,900	5,815
June 30, 2001 (indicative ceiling)	6,050	6,247
August 31, 2001 (indicative ceiling)	7,175	6,748
October 31, 2001 (indicative ceiling)	7,550	7,141
December 31, 2001 (performance criterion)	7,750	...

1/ These ceilings shall be based on the average of the stocks prevailing during the five working days including and immediately preceding each of these dates.

1. Targets for net domestic assets and base money are unchanged from Annex D of the July 31, 2001 MEFP. However, the base money target will now be a performance criterion under the program. Correspondingly, net domestic assets (whose definition has been revised) has been made an indicative target.

2. 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 U.S. dollars at current cross rates, and the figures converted into Turkish lira at end-July 2001 exchange rates.

3. Base money is defined as currency issued by the CBT, plus the banking sector’s deposits in Turkish lira with the CBT. Indicative ceilings for base money are shown in Table 4.a below.

4. 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 May 3 MEP), medium-term and long-term foreign exchange credits (net), and other net foreign assets (including deposits under the Dresdner scheme of original maturity of two years or longer and the holdings in accounts of the Turkish Defense Fund, but excluding CBT’s net lending to domestic banks in foreign exchange. As of March 31, 2001, net foreign assets of the CBT amounted to TL 9,012 trillion.

5. The cumulative net change in the devaluation account from its balance at end-1999 (excluding any distribution of unrealized foreign exchange profits, in cash or through the write-off of government paper held by the CBT, since end-March 2001), evaluated at end-July 2001 exchange rates, will be subtracted from end-period NDA stock as defined above. The balance of the devaluation account at end-March 2001 was TL-1,380 trillion.

6. 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:

D NDA = R*DB,

where: R denotes the 4 percent reserve requirement plus the 2 percent liquidity requirement coefficient and DB denotes the change in base generated by a change in the definition of the reserve aggregate. The averaging period will not be changed during 2001.

7. NDA ceilings will be adjusted for any change in the reserve requirement coefficient according to the following formula:

where: B is the level of the base to which the reserve requirement applies on the test date and ΔR is the change in the reserve requirement coefficient and the liquidity requirement coefficient.

8. 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 3a. Turkey: Performance Criteria and Indicative Targets on the Net Domestic Assets

of the Central Bank of Turkey (in trillions of Turkish Lira) 1/

	Ceilings	Actual
Outstanding NDA as of April 30, 2001:	6,739
May 31, 2001 (performance criterion)	9,750	7,942
June 30, 2001 (performance criterion)	13,250	12,943
August 31, 2001 (performance criterion)	17,250	16,437
October 31, 2001 (performance criterion)	21,150	17,933
December 31, 2001 (indicative targetperformance criterion)	22,400	…

1/ The compliance with the performance criterion (indicative target) shall be based on the average of the stocks prevailing during the five working days including and immediately preceding each of these dates.