Some parties are kicking against the traces ahead of a November 3 election, but whatever its complexion, Turkey's next government may be effectively locked in collaboration with the IMF.

The International Monetary Fund itself needs a success for its $16 billion crisis pact with Ankara after harsh criticism of its handling of the 1998 Asian financial crisis and the problems in the past year in Argentina.

The United States, whose influence on the IMF is huge, sees a stable Turkey as vital to any military campaign in neighbouring Iraq.

And the frontrunner in the election, the Justice and Development Party (AKP) is seen as likely to negotiate for relatively minor revisions to the pact.

"The IMF may put at risk the repayment of its outstanding loan to Turkey if it breaks the rope linking it to Ankara," said Emin Ozturk, economist at Bender Securities.

Muslim Turkey has received more than $28 billion since 1999 partly thanks to pressure from the Fund's biggest shareholder, the United States, which sees the country as a haven of Western-style democracy on the edge of the turbulent Middle East. It has repaid $7.5 billion so far.

"It is impossible to think that the IMF is entirely independent from the States. For this reason, Turkey's strategic partnership with the States is another reason to believe that the IMF will continue to support Turkey," Ozturk said.

Ankara has made it clear to Washington it wants financial guarantees in return for air bases and other military facilities it would need for operations in Iraq. As well as wrecking tourism, a campaign could drive up interest rates again, making debt more expensive and throttling incipient growth.

Many Turks see the 184-member IMF's credibility at stake after the harsh criticism over the Asian and Argentine crises.

"After the collapse in Argentina, the IMF is desperately seeking a success story and that would be Turkey," a government official said. "So it has to continue to support Turkey."

However the IMF has put a $1.6 billion tranche of the loan on hold. The Fund asked Turkey last week to fulfil its obligations to secure the money. Analysts expect the IMF to await the result of next month's elections and the formation of a new government before it acts.

Turkey faces none of the electoral hazards of Brazil, where leading parties questioned the country's IMF pact. Indeed, bond yields here are easing significantly in rising optimism over the outcome on November 4.

Poll frontrunner AKP, viewed with suspicion by the powerful military and markets for its Islamist roots, has soothed market fears somewhat, sending a roadshow abroad to explain policies.

AKP says it would like to negotiate with the IMF to lower a primary surplus target if it comes to power. The programme aims at achieving a public sector primary surplus of 6.5 per cent of gross national product.

This could create a dispute between the Fund and Ankara but no one expects any break in years old relations with the IMF. Some of the 2003 targets, such as 20 per cent consumer price inflation and five percent growth, may be modified if the new government insists, bankers say.

"The inflation target could be for example 23 per cent and growth might be revised up to 5.5 per cent," said a former economy official who took part in past talks with the IMF.

The Republican People's Party (CHP), the only mainstream party consistently polling above a 10 percent barrier for entry to parliament, on the other hand, appears ready to stick with the primary surplus target.

The centre-right True Path Party yesterday called for more forthright revisions of the pact than the AKP contemplates.

"We will make a revision to the IMF programme. The IMF may oppose this but we'll persuade them," DYP chief Tansu Ciller said.

Fortunately for the IMF, DYP is unlikely to have control of the economy even if it wins the necessary 10 per cent of the vote required to enter parliament.

If, as currently expected, the AKP emerges as biggest party, it should have the first opportunity to form a majority government with CHP as a possible suitor. If AKP failed in this, CHP might strike an alliance with, perhaps, True Path.

The latter formula would make it more likely that Kemal Dervis, the architect of the IMF plan, who is not liked in the AKP, would return to his former post of economy minister. That would please markets.

Some think that the IMF may combine the fourth review of the programme with the fifth one in January and release the two tranches worth about $1.9 billion together in early 2003.

Another possibility is to refresh the programme and Turkey's commitments under an "enhanced" form of the present plan.

"Any such programme may help Turkey to repay the IMF money more comfortably in 2004 and 2005," said a state banker.

Turkey will repay the bulk of of the outstanding IMF debt in 2004 and 2005, more than $7 billion each year.

Turkey will service $62.6 billion of domestic and $10.8 billion of foreign debt next year. IMF support is key to borrowing at reasonable prices in a market already scarred by Argentina's defaulting on its debt and negative sentiment towards emerging market debts.

The new government will be relieved of any debt roll-over problem if real interest rates, running now around 30 per centage points, come down. To do this, it must rebuild confidence in the economy and end the political uncertainty of recent months. Either way, a strong, clear government is needed.

"Further positives could come in the form of additional support from the IMF, and positive signals from the European Union on accession talks," said Morgan Stanley in a recent note.