ECONOMY

Salvation plan for Turkish firms

ISTANBUL- Turkish bankers and big businesses said yesterday a plan to restructure corporate debt and save scores of major firms from failure in Turkey’s worst recession since 1945 would be ready to be sent to the Cabinet next week. A potential deal would likely involve supportive loans from international bodies such as the World Bank’s private sector arm, the International Finance Corporation (IFC). I hope we can agree and present our decision to the Cabinet by the end of next week, Rifat Hisarcikoglu, chairman of the influential Union of Turkish Chambers and Chambers of Commerce, told reporters after a meeting in the financial capital, Istanbul. Time is of the essence. Firms have been shedding jobs ever since a crisis battered Turkey in February, and the rescue plan would involve pushing new legislation though Parliament before it can swing into action. Sources close to the preparations of the deal have put a rough figure of $2-$3 billion on the size of the international lending needed to keep the firms alive and start the wheels of Turkey’s economy turning again. It is unclear whether the sum would form part of the $13 billion in fresh international loans Turkish officials say they are seeking to plug a financing gap in 2002. They say the IFC would be one suitable lender, although the cash could come in smaller installments over a few months. Turkey has also been in talks with the European Investment Bank. The country is in the depths of its worst recession since 1945, which is expected to cut gross national product by 8.5 percent this year. Industrial production fell 9.2 percent year-on-year in September. Hundreds of firms are in trouble, paralyzed by the weight of foreign currency debts that ballooned after the lira lost half its value. Others have been battered by the dearth in consumer demand and interest rates on lira loans that soared during banking crises in November last year and February this year. At the very least we have to untie those whose hands and arms are tied, said Ankara Chamber of Industry Chairman Zafer Caglayan. SESME said in a statement it has already committed itself to ensuring, both to consumers and the government, that the transition to the euro and the ban on loss-leader practices (the sale of products below cost to attract customers) as of January 1 will not lead to price rises.