Turkey is likely to sign an agreement with the International Monetary Fund (IMF) in the near future, with Prime Minister Recep Tayyip Erdoğan giving the green light on Friday to a precautionary stand-by deal with the world body.

Erdoğan met with IMF Managing Director Dominique Strauss-Kahn on Friday on the sidelines of the G-20 summit in Washington, discussing the framework and maintenance of relations. Economy officials said Turkey and the IMF agreed to continue technical work, adding that the two sides would pursue discussions over carrying on the relationship at a certain level. IMF officials also briefed Erdoğan on the global economic outlook and voiced their expectations and approaches. The IMF released a statement after the meeting, noting that Strauss-Kahn and Erdoğan had agreed to remain in close contact and maintain cooperation in the future. In addition, Strauss-Kahn said he is sure Turkey and the IMF would reach an agreement very quickly and that an agreement between Turkey and the IMF is necessary to bring stability to the situation in the country.

He noted, however, that differences of opinion persist about the dimension and the probable results of the arrangements necessary for the Turkish economy as well as the size of the program package which the IMF could finance.

"Turkey has a large economy, and this is encouraging for the country. However like the other countries in the world, the Turkish economy has been negatively affected due to a decrease in foreign capital flow. In this sense, we should help Turkey overcome difficulties," the IMF's managing director said, supporting the idea of signing a stand-by deal with Turkey.

In light of all these developments, it is now expected that the two sides will shortly sign a stand-by deal. Some officials said the IMF would give Turkey a loan ranging from $15 billion to $20 billion.

Meanwhile, the prospect of reaching a stand-by agreement with the IMF caused optimistic reactions in the Turkish business world. Ziraat Bankası General Manager Can Akın Çağlar said problems the Turkish economy faces mainly result from a lack of foreign exchange in the domestic market and can be overcome to some extent since a possible stand-by deal with the IMF will bring in extra foreign currency. He underlined that it will be possible to figure out if the stand-by deal will be to Turkey's benefit only after it is signed. Halk Bankası Deputy General Manager Süleyman Aslan noted that signing a stand-by deal with the IMF will have a positive effect on the domestic market.

Akfen General Holding CEO Hamdi Akın asserted that funds coming from the IMF must be used to ease the burden of the financial sector. "It will not help if the government decides to allocate the money to pay for the approaching local elections, for instance," he noted.

Hyundai Assan CEO Ali Kibar said signing a stand-by deal with the IMF would not be enough and underlined that the government should focus on taking effective measures to help the non-financial sector recover. "Cooperation between the banking sector and the non-financial sector should be maintained," he said.

Economy Minister Mehmet Şimşek recently said that Turkey has two choices: either continue to progress with the IMF or turn its back on it.

Turkey's previous $10 billion IMF stand-by deal -- which stipulated conditions related to loans -- expired in May, and an IMF team has been in Ankara for post-program monitoring and talks on a possible new deal since mid-October.

TODAY'S ZAMAN