ECONOMY

Dervis expects another $10-billion IMF package

ANKARA – Economy Minister Kemal Dervis rallied support among opposition leaders yesterday for the reform process, which is key to winning Turkey a fresh $10-billion loan from the International Monetary Fund. Dervis expressed confidence that the new funds would be added to the current $19-billion IMF rescue package as Turkey strives to emerge from its worst recession since 1945. The government has a sizable majority in Parliament and is capable of pushing through the legislation alone, but opposition support would ease the passage of the reforms and help present a united front to closely watching financial markets. Even if they have different views on the details, all the leaders must unite on a minimum consensus – reducing the debt burden and creating the conditions for growth, Dervis told reporters after meeting one of a series of opposition leaders. Former Prime Minister Tansu Ciller, leader of the right-wing True Path Party, said she had discussed with Dervis three draft laws which Parliament must approve to seal the IMF deal, covering the areas of public procurement, debt and tobacco. The first of these bills, a reform of the system of state tenders, is a key anti-corruption measure that would become effective in January 2003 – a timetable slower than the IMF may have liked. The Fund has said an image of widespread graft is one of the chief obstacles to Turkey’s economic recovery. While pledging support for the public procurement bill, Ciller said she was opposed to the tobacco law which envisages liberalizing the sector, cutting subsidies while opening the market to foreign investment. The public financing and debt management law is designed to tighten up regulations and place limits on state borrowing. Turkey is struggling with a heavy debt burden in the wake of a financial crisis in February, which halved the value of the lira. Budget approval Turkey’s reform efforts have made solid progress this year and received a boost on Wednesday evening when Parliament passed a budget for 2002 in line with promises to the IMF. A Fund delegation is currently negotiating details of the proposed loan with Turkish officials in Ankara and expects to wrap up the talks by the end of the week. We will continue to take all the credits under the existing program and make our agreed payments. On top of that, the IMF director will propose $10 billion in additional resources and the executive directors will vote on this, Dervis said. He said he did not know when the directors would meet. Turkish financial markets have strengthened recently amid widely held expectations that the IMF would approve the deal once the Fund team returns to Washington with its findings. The new lending is vital for Turkey to cope with its debt burden and leave behind a recession which officials expect to erode gross national product by around 8.5 percent this year. The budget targets reducing wholesale price inflation to 31 percent by the end of 2002 from 84.5 percent in October and anticipates GNP growth of 4 percent next year. IMF Executive Director Willy Kiekens, part of the visiting team, has said he expects IMF Turkey desk chief Juha Kahkonen to make a statement about the visit today.