ANKARA – The Turkish government agreed yesterday to a package of support for its banks expected to cost some $4 billion, despite newspaper reports of divisions between the reformist economy minister and his nationalist allies. «We evaluated the banking issue all night and reached agreement this morning,» Prime Minister Bulent Ecevit told reporters in the capital Ankara. The reforms are part of moves Turkey is taking ahead of expected International Monetary Fund (IMF) approval later this month of a $10-billion addition to a $19-billion crisis rescue lending package. Economy Minister Kemal Dervis argues the only way to kick start an economy expected to have contracted 8.5-percent in 2001, is to rehabilitate the banking sector and clear up the bad loans that are blocking fresh lending. Critics of the plan, which would include steps to recapitalize major banks, have said the State would be supporting the bankers widely held responsible for Turkey’s economic woes following last year’s financial crisis. But Ecevit said the government would be very careful how it distributed the cash. «This support will not be a gift. We will be very careful to award credits to banks that operate with complete transparency and we will make sure the banks operate with the strictest of discipline.» The government would also transfer capital to state banks Ziraat Bankasi and Halk Bankasi to provide much-needed lending for Turkey’s crisis-hit economy, Dervis told MPs from Ecevit’s party at a morning briefing. «We are in a position to be able to provide significant additional credits to Ziraat, Halk, state enterprises, farmers and tradesmen,» Dervis said. Following the announcement, shares on the main Istanbul National-100 index edged down 1.6 percent to 13,818.59 points, just below a key resistance level, but the lira currency firmed to 1,388,000 to the dollar on the spot market. «While in the previous transactions the primary target we had was to establish and consolidate a certain level of spread, this time the overriding target is to broaden the investor base,» Sardelis said.