ECONOMY

Turkey moves forward on tax and bank reform

ANKARA – Turkey moved forward yesterday on two delayed reforms promised to the IMF, with the government sending a tax reform bill to Parliament and the bank watchdog pledging to clear up a sector audit by June. IMF Turkey desk head Juha Kahkonen said yesterday initial findings of an IMF inspection team currently in Ankara had shown the economic program was on track and that the Turkish economy was more robust than before the crisis. Turkish officials said the tax reform bill had been sent to Parliament for debate and an eventual ratification vote. Parliamentary approval of the Special Consumption Tax would eliminate one of a number of reform measures Turkey has promised the fund but is running late on delivering. The new tax will streamline Turkey’s revenue collection system by merging some 16 different taxes, levies and duties under a single tax. Turkey had promised the International Monetary Fund it would pass the tax law by the end of April. It is now due for discussion in Parliament and eventual voting, for which no date has been set. A team of IMF inspectors is in Ankara reviewing progress under the accord, with a $1.1 billion loan tranche linked to their approval. Bank capitalization The deputy chairman of Turkey’s banking regulator said a grand audit of the sector had been completed and banks would be told what steps they must take to meet new capitalization standards by the start of June, three weeks behind a target agreed with the IMF. The audit is designed to reveal the extent to which non-performing loans weigh on Turkey’s banks and how much capital their owners must add to bring capitalization levels up to new standards. A fragile banking sector lay at the heart of a financial crisis that struck in February 2001. The audit has taken longer than planned but the banking watchdog’s deputy chairman, Teoman Kerman, said the conclusions would be made in early June. “We think we will finish everything in the first week of June. When the June general assemblies take place we will say to the banks in need of capital, ‘Boost your capital by so much,’» Kerman told a panel in the Aegean city of Izmir. Banks will be able to apply for state help to meet the new capitalization levels if their owners cannot find the money. In a related development, the general manager of Turkish state-owned landline monopoly Turk Telekom announced yesterday plans to restructure it as a holding company, ahead of a planned privatization. Turk Telekom has been on Turkey’s selloff list since the 1990s, but political wrangling and poor market conditions have consistently delayed any privatization. Turkey has pledged to the IMF under a $16 billion loan plan that it will adopt a new Telekom sale plan by the end of this month. «Turk Telekom’s strategy structure for the new period will be based as a holding, the executive has decided,» Turk Telekom General Manager Ibrahim Hakki Alpturk told a conference in Istanbul. He said accounting firm Anderson was advising on the new structure and would provide a full plan in 19 weeks. Turkcell owns new GSM operator Aycell, which is likely to be run independently under a holding company structure. Alpturk gave no details of any plans. «This is a structure that sees individual companies operating independently within their own field of occupation,» he said.