ECONOMY

Turkey spies brighter future

ANKARA (Reuters) – Finance Minister Sumer Oral said yesterday he saw no debt repayment difficulties for crisis-hit Turkey in 2002, adding that reforms were now in place to ensure Turkey meets its budget targets. «No problems are foreseen in turning over domestic and foreign debt in 2002,» the minister said. «All measures have now been taken to ensure that income and expenditure targets in the 2002 budget are met.» Turkey’s Parliament has passed several cost-cutting laws in recent weeks as it looks to the IMF to approve a $10 billion supplement to its $19 billion economic reform program later this month. Prime Minister Bulent Ecevit flew to Washington yesterday, accompanied by senior economy officials, and will meet US President George Bush and senior IMF and World Bank officials in the coming days. Oral said the future will be brighter for Turks after a year when consumer spending power was pounded by a 50 percent depreciation in the Turkish lira. «Our people have made great sacrifices during the implementation of the program… From now on the State will make most of such sacrifices, not the people,» Oral told a panel at Turkey’s Capital Markets Board (SPK). The 2002 budget foresees deep cuts in state expenditure. Oral said he expected Turkey to exceed a primary surplus target of 11,400 trillion lira (around $8.4 billion) when the government releases 2001 budgetary results, expected within the week. Turkish bonds and stocks traded flat yesterday but the lira rose to five-month highs against the dollar as optimism over Ecevit’s trip to Washington outweighed worries over possible US action in Iraq. The lira closed the day at 1,362,000 to the dollar on the spot market, continuing an extended rally as confidence in lira assets rose on progress in governmental reform efforts, which are key to approval of the additional lending. But the lira has still lost 49.6 percent of its value since Turkey abandoned its pegged currency regime amid a February financial crisis. «There is no (dollar) buying interest while there is keen selling as banks open up fresh positions for the new year,» said one currency dealer. Turkey’s central bank recently predicted the lira would gain in value during 2002. Equities on the main Istanbul National-100 index closed up 0.16 percent at 13,638.55 points, while yields on the busiest bills maturing on September 4, 2002 rose to 71.47 percent from Friday’s 71.31 percent ahead of a domestic debt sale today. Brokers said hopes that Ecevit would secure better trade quotas for Turkish textile exporters helped boost the share index. «Expectations for the US talks have brought some positive trading today. There has been movement in textile shares in particular,» said Mustafa Yuksekulku of Yatirim Financing in Istanbul. The textile sector index rose 3.71 percent. Brokers said press reports saying Bush would ask Turkey to pressure Iraqi President Saddam Hussein to abide by UN sanctions had hit early morning trading, but the market later recovered. Worries that the US may extend its war on terrorism to Turkey’s eastern neighbor have dented market optimism over the visit. Turkey’s Parliament has passed a series of reforms deemed critical to extra IMF lending, most recently legislation foreseeing financial support to bolster the capital of crisis-hit banks.