Sezer vetoes crucial social reform package

ANKARA (AFP) – Turkish President Ahmet Necdet Sezer has vetoed a reform package to overhaul the country’s troubled social welfare system in line with demands by the International Monetary Fund (IMF), a statement from his office said Friday. The legislation passed by Parliament last week aims at transforming the current Turkish social security system from top to bottom. But Sezer considered unconstitutional an article on procedures for appointing managers of the social security administration and sent the package back to Parliament, the statement said. The new legislation foresees preventing increases in the deficit of the state pension fund to allay the risk of the system collapsing financially. Turkey was hit in 2001 by its worst economic crisis in modern times. The country undertook commitments to the IMF to adhere to a rigorous budgetary discipline and reconstruct its banking and social security system in return for credit. The IMF last year refused to release a tranche of 1.58 billion dollars (1.254 billion euros) of a three-year credit line of almost 10 billion dollars (7.9 billion euros) granted earlier that year, because of delays by Turkey in adopting the new legislation on social security and pensions. The IMF credit was finally released in December. The social reform package, drawn up by the ruling Justice and Development Party (AKP), aims to curb a growing social security deficit by more efficient management and extending the retirement age. One of the main reforms foresees merging the three different social security institutions – one for workers, one for the self-employed and one for civil servants – into a single body. The package also plans to gradually increase the retirement age to 65 for both sexes by 2048, a provision labor unions have slammed as «retiring to the grave.» The package was originally scheduled to be adopted last year but failed to make it to the floor before the summer recess, prompting the IMF to freeze part of the loans from the 10-billion-dollar standby deal. The IMF released 1.58 billion dollars (1.3 billion euros) in December after dropping the adoption of the social security reform as a condition for the loans. The welfare overhaul is seen as crucial to Turkey’s structural reform drive and monetary success as the social security deficit constitutes the biggest burden on the budget.