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Turkey to find its way with or without IMF deal: PM

Talks between Turkey and the IMF on a new accord, keenly sought by business leaders and financial markets, stalled last month due to differences between the two sides over the terms of the deal. A $10 billion regular stand-by accord expired last May and Turkey still owes the fund billions of dollars.

"If we reach an agreement with the IMF so be it, if we don't we will pay our $8 billion debt (to the Fund) and continue on our path," he told a meeting at the Istanbul Chamber of Commerce.

His comments echoed his recent ambivalence about a deal and tough talk as campaigning for municipal elections in late March get under way.

Erdogan has previously said the failure to reach a deal would not be "the end of the world", however analysts say they suspect that much of his hard stance is linked to the polls and concern by Erdogan that a deal would quickly force the government to restrict spending.

The financial market still expects a deal with the IMF of around $25 billion, which would make it the biggest loan request in Turkey's history.

The lira did not react to Erdogan's comments.

Erdogan said on Jan 27 the IMF talks had been suspended for 10 days in attempt to clear remaining obstacles, but despite talks between Turkish and Fund officials at the World Economic Forum in Davos it is unclear when an IMF team will return to Ankara.

The EU membership candidate's $700 billion economy slowed sharply last year and there are growing expectations of it slipping into recession this year. Data on Monday showed industrial output shrank 17.6 percent in December.

The IMF has been pushing for tighter fiscal policy and a higher primary surplus while the government has wanted to use IMF money to stimulate economic growth, fearing a deepening of the economic slowdown.

The government has sent out conflicting signals over whether a deal might be struck before the March poll.