Anadolu Agency: News in English, 00-07-07

Anadolu Agency: News in English Directory - Previous Article - Next Article

From: The Anadolu Agency Home Page at <http://www.anadoluajansi.com.tr/>

NEWS

07 JULY 2000 Friday

CONTENTS

[01] TURKEY-PRESS SCAN

[02] IMF APPROVES SECOND SUPPLEMENTARY LETTER OF INTENT AND 295 MILLION U.S. DOLLARS CREDIT

[03] EARTHQUAKE ON ISLANDS OFFSHORE ISTANBUL -27 PERSONS INJURED

[04] IMF APPROVES SECOND SUPPLEMENTARY LETTER OF INTENT

[05] IMF APPROVES SECOND SUPPLEMENTARY LETTER OF INTENT (2)

[06] IMF APPROVES SECOND SUPPLEMENTARY LETTER OF INTENT (3)

[07] TREMOR IN MARMARA ISLES -ONE PERSON DIES OF HEART ATTACK IN GEBZE

[08] COMPATIBLE BONE MARROW FOR TURKISH CYPRIOT LEUKAEMIA BOY FOUND

[09] TURKEY-GREECE-EU WORKING GROUP

[10] PRIME MINISTER ECEVIT RECEIVES WOLF, THE U.S. PRESIDENT'S SPECIAL ADVISER TO CASPIAN BASIN

[11] TURKEY, GREECE, AND EU COMMISSION JOINT WORKING GROUP SET UP

[12] FOREST FIRE ON SAMOS ISLAND EXTINGUISHED

[13] ANTALYA AND MUGLA ENJOYS TOURISM BOOST

[14] EXPORTS OF AUTOMOBILES DECREASE 26 PERCENT IN JUNE

[15] INCREASE RECORDED IN NUMBER OF TOURISTS VISITING TURKEY

[01] TURKEY-PRESS SCAN

HURRIYET (LIBERAL)

ACCIDENTALLY DETONATED GRENADE KILLS 2 SOLDIERS
Two soldiers died and 11 others were injured when a soldier accidentally detonated a hand grenade as they were searching the fields in Catak township of eastern Van province in an operation against PKK terrorists. Ozcan Oner and Serafettin Orhan died and 11 others, five of them seriously, were injured in the blast. The injured soldiers were hospitalized for medical treatment at Van Military Hospital.

MILLIYET (LIBERAL)

IT WILL UNITE THREE CONTINENTS
Patten, the European Union (EU) Commission said that the Baku-Thrace-Greece pipeline will ease the integration of the connections between Caspian, Black Sea, Mediterranean and North Africa. ''The new pipeline will also function as the driving force for Baku-Ceyhan pipeline,'' he said. Meanwhile, John Wolf, U.S. President Clinton's Energy Representative will come to Turkey before visiting Kazakhstan.

SABAH (LIBERAL)

VERY HOT DAYS
The heat in Antalya, Manisa and Mugla reached a record level. The Meteorology said that the heat in Antalya reached 45.6 degree, 45.4 degree in Milas and 45.1 degree in Manisa, adding these are record degrees. The extreme heat will continue to be effective in the country for one week more. Unfortunately, forest fires break out all over the country due to the heat. A total of 69 hectares of forestry were burnt in nine forest fires that broke out yesterday.

CUMHURIYET (LEFT)

NO LAWS SPECIALLY MADE FOR INDIVIDUALS
Efforts by various circles to clear Necmettin Erbakan, leader of the outlawed Welfare Party, from his sentence that bans him from political activities lifelong, created harsh reaction among political circles. Nationalist Movement Party's Deputy Chairman Sevket Bulent Yahnici said they were strictly against the idea of changing the article no. 312 of the Turkish Penal Code, while Ali Arabaci of the Democratic Left Party said Erbakan had to be put in prison as all other persons violating that particular article had been. Most deputies expressed full accord over the existence of issues of greater importance on the country's agenda than an amendment to the Turkish Penal Code to save Erbakan.

DIYARBAKIR ENJOYS TOURISM BLAST
The Diyarbakir Provincial Tourism Directorate, in a report sent to the Ministry of Tourism, said that there was an increase by 100 percent in the number of tourists visiting the province. The report said that the region itself had a great touristic potential, which had to be made use of, but that greater investments and financial support were required to make Diyarbakir a more attractive spot for tourists.

RADIKAL (LEFT)

EU INITIATIVE FOR BAKU-CEYHAN
The European Union (EU) has taken initiative for a new pipeline. Central Asian oil will be transported via Turkey and Greece due to the project. With this new project the chance of Baku-Ceyhan to be implemented will also increase.

YENÝ BÝNYIL (LIBERAL)

TURKIYE (RIGHT)

BUSH'S ADVISOR WARNS WHITE HOUSE: ''GIVE UP CYPRUS''
Richard Perle, the Advisor of Republican Party's candidate George W. Bush for U.S. President, voiced his opinion on Cyprus with common sense. Perle said, ''the United States should not put pressure on the sides in Cyprus. The solution reached through pressure will be unjust.''

SHE EXPECTS SEVEN CHILDREN
After undergoing ultra-sound, Nur Sema Bacak, 36, who received treatment against barrenness, is expecting seven babies. Bacak has been married for 19 years and is now living in eastern Erzurum province.

HE CONQUERS ITALY
UEFA Cup champions Galatasaray's and Turkish National Team's world famous striker Hakan Sukur signed a three-year contract with Italy's Serie A club Inter Milan for 7.5 million U.S. dollars.

ZAMAN (CONSERVATIVE)

OUR EU MEMBERSHIP IN DANGER
Council of Europe Parliamentary Assembly Chairman Russel Johnston said imprisonment of Erbakan was a negative development in the way for EU membership. ''The decision will anger Europe,'' he said. Noting that the decision damaged Turkey's integration with European Union, Johnston said the decision contradicted with COE's basic criteria for freedom of expression that was necessary for democracy.

SADDENING ACCIDENT IN VAN
Two soldiers died and eleven others were injured when a hand grenade on one of the soldiers who were patrolling around Catak township of eastern Van province exploded accidentally. Sources said five of the eleven soldiers were seriously injured.

[02] IMF APPROVES SECOND SUPPLEMENTARY LETTER OF INTENT AND 295 MILLION U.S. DOLLARS CREDIT

The review was completed in light of among other things the observance of end-March performance criteria and the judgement of the IMF that the program remains on track. As a result of the review, Turkey will be able to draw up to the equivalent of Special Draw Right (SDR) 221.7 million (about 295 million U.S. dollars) from the IMF.

The three-year stand-by was approved on December 22, 1999 in a total amount equivalent to SDR 2,892 million (about 3.9 billion U.S. dollars).

Turkey has so far drawn the equivalent of SDR 443.4 million (about 590 million U.S. dollars) under the stand-by.

In commenting on the IMF Executive Board discussion, Stanley Fischer, First Deputy Managing Director and Acting Chairman of the Board, said, ''the Executive Board of the International Monetary Fund commended the Turkish authorities on their steadfast implementation of the disinflation and fiscal adjustment program launched in late 1999, which had led to a rapid deceleration of inflation and a resumption of economic growth.''

''Strong fiscal performance in the first half of 2000 has underpinned the improvement in macroeconomic conditions. Despite stronger-than-expected revenues and a faster-than-anticipated drop in interest rates, expenditure policies had not been relaxed. The authorities' commitment to keep nominal primary expenditures in line with the program for the rest of 2000 will likely result in a primary fiscal surplus higher than that envisaged by the original program target for 2000,'' Fischer said.

''Inflation, while still high, has declined to its lowest level since 1986. Also, partly reflecting the increase in oil prices and the accelerated restocking of raw materials and intermediate goods, imports have picked up significantly in the first four months of 2000. In order to ensure the attainment of the end-year inflation target, as well as to minimize risks to the external accounts, the authorities have appropriately committed themselves to strengthening the macroeconomic framework through firm fiscal policy implementation, particularly in the area of primary expenditure as indicated above. They also stand ready to introduce additional fiscal measures, if warranted by macroeconomic developments. The continued strict implementation of the program should help minimize any latent risks to both inflation and the external balance,'' he said.

''A key contribution to the further fall in inflation will continue to come from rigorous implementation of the monetary and exchange rate framework introduced in early 2000. Specifically, the execution of the no- sterilization rule has provided additional credibility to the program. However, an early decision on the monetary framework that will, over the medium term, replace the existing one, as envisaged in the program, would help sustain credibility and further reduce long-term interest rates,'' he stated.

''Progress in the area of structural reform has continued, albeit with some delays. The recent approval of the law on agricultural state cooperatives, and the decision to increase wheat prices in line with program commitments, are key steps in reforming agricultural policies. The privatization program has remained on track and, with some delay, the privatization of Turk Telecom has now been launched. Efforts to accelerate the privatization process are needed. Progress in making the Bank Supervision and Regulation Agency operational ahead of the end-August program deadline is welcome. The Turkish authorities are encouraged to proceed speedily to the restructuring and eventual privatization of the banks taken over by the Saving Deposit Insurance Fund. In addition, the structural component of the program has been reinforced by the authorities' commitments under the Economic Reform Loan recently approved by the World Bank,'' Fischer added.

''The authorities have completed a fiscal transparency Report on the Observance of Standards and Codes (ROSC) and the Board welcomed their intention to publish it,'' Fischer said.

[03] EARTHQUAKE ON ISLANDS OFFSHORE ISTANBUL -27 PERSONS INJURED

Bogazici University Kandilli Observatory and Seismology Centre said that the epicenter of the tremor was the islands offshore Istanbul.

The earthquake took place just 35 kilometers to Kandilli, it is not an aftershock of Kocaeli or Duzce earthquakes, it is rather an independent one.

Meanwhile 27 persons who jumped out of their windows and balconies in panic in Kartal district of Istanbul were injured and hospitalized.

Officials said that no building collapsed on islands or Istanbul due to the quake.

The conditions of the injured are fine.

[04] IMF APPROVES SECOND SUPPLEMENTARY LETTER OF INTENT

The review was completed in light of among other things the observance of end-March performance criteria and the judgement of the IMF that the program remains on track. As a result of the review, Turkey will be able to draw up to the equivalent of Special Draw Right (SDR) 221.7 million (about 295 million U.S. dollars) from the IMF.

The three-year stand-by was approved on December 22, 1999 in a total amount equivalent to SDR 2,892 million (about 3.9 billion U.S. dollars).

Turkey has so far drawn the equivalent of SDR 443.4 million (about 590 million U.S. dollars) under the stand-by.

The thirty-article second letter of intent sent by State Minister Recep Onal for Economic Affairs and Central Bank Governor Gazi Ercel is as follows:

''1- Just a few months after its inception, the disinflation and fiscal adjustment program initiated by the government of Turkey in late 1999—and supported by a stand-by arrangement (SBA) with the International Monetary Fund—is having clear and beneficial effects on the economy: inflation in the first five months of 2000 has dropped to the lowest level in 14 years, the public debt-to-GNP ratio is falling, interest rates have declined rapidly, and output growth is resuming. These results have been achieved through the strict implementation of our policies, which have garnered credibility in both domestic and international financial markets, as also reflected in upgrades by major credit rating agencies.

2- In spite of these positive results, the work remains unfinished. There is a need to further the disinflation process—so as to ensure the attainment of the 25 percent CPI inflation target for end-2000 and prepare the grounds for its decline to 10–12 percent by end-2001—while at the same time protecting external balance and growth prospects. This letter outlines the progress made thus far, confirms our key policy goals, and sets out new macroeconomic and structural policy steps to sustain the momentum of the adjustment process.

Macroeconomic developments and policy goals

3- Significant progress has been made towards achieving the program’s goals. In spite of some unfavorable external developments, such as the sharp rise in international oil prices, inflation in the first five months of 2000 fell to the lowest level since 1986. This result shows that the government’s program is sharply affecting price dynamics, and strengthens our resolve to continue to gear macroeconomic policies to the attainment of the 2000 inflation target (25 percent December 2000/December 1999). Moreover, industrial production accelerated sharply in the first four months of 2000, an encouraging result with respect to the program’s GNP growth projection of 5–5.5 percent in 2000.

4- The unexpected increase in international oil prices and the accelerated restocking of raw materials and unfinished products have led to a pick-up of imports in early 2000. As a result, the external current account deficit is expected to widen. However, we expect that it will remain at a level that, in the context of the strong policy environment brought about by our program, is sustainable.

5- Against this background of positive developments, we intend to continue implementing the program strictly, and, in fact, to bolster some aspects of the program’s policies, so as to minimize the risks to both inflation and the balance of payments.

Fiscal Policy: The Primary Surplus

6- Fiscal performance in the first quarter of 2000 has been strong. The floor on the primary surplus of the consolidated government sector was met by a good margin. The indicative targets for the primary surplus inclusive of privatization receipts and for the overall deficit have also been met. Moreover, developments in April suggest that the fiscal program will remain on track during the second quarter.

7- This performance has been underpinned by the budgetary measures envisaged in the program. In addition to the measures enacted in December 1999, the quarterly advanced payment of the personal and corporate income taxes was reintroduced in April, and administrative measures were introduced in May to contain overruns in health expenditure of Bag Kur (one of the social security institutions), meeting one of the program’s structural benchmarks. Another structural benchmark (submitting to Parliament the law to improve the administration of Bag Kur, including the increase in health premia and co-payments) was also met. This law, together with a package of other laws strengthening the pension system, is expected to be passed by end-October.

8-The fiscal performance, however, was not equally strong for all components of the consolidated government sector. The central government budget did considerably better than expected, owing primarily to strong revenue performance. But the performance of key state enterprises has been weakened by the hike in international oil prices, as well as rising personnel costs. To allay these pressures, we will continue the strict implementation of the employment policy involving a replacement ratio of retiring employees not exceeding 15 percent.

9- There is also a need to ensure that any excess of revenues of the central government budget that may arise with respect to the program figures is saved. This policy is needed to limit the risks to the external current account, support disinflation, and offset the weakening in the state enterprise sector. To this end, tax rates will remain at least at the current level (and the petroleum consumption tax will be adjusted in line with the WPI) and primary expenditure of the central government will be kept equal to or below the original program projections. More specifically, primary expenditure of the central government will not exceed TL 16,720 trillion for the first three quarters of 2000 and TL 24,690 trillion for the whole year (net of earthquake-related expenses). Finally, should it be necessary to achieve our macroeconomic targets, we will introduce additional fiscal measures.

10- Fiscal policy will continue to play an important role in 2001. The preparation of the 2001 budget is now starting, and public expenditure guidelines will be defined soon and incorporated in the Prime Minister’s budget call and in the Ministry of Finance’s budget guidelines. In this respect, we intend to keep primary expenditure of the central government (net of earthquake-related outlays) constant in real terms in the 2001 budget with respect to the 2000 program figures.''

[05] IMF APPROVES SECOND SUPPLEMENTARY LETTER OF INTENT (2)

The review was completed in light of among other things the observance of end-March performance criteria and the judgement of the IMF that the program remains on track. As a result of the review, Turkey will be able to draw up to the equivalent of Special Draw Right (SDR) 221.7 million (about 295 million U.S. dollars) from the IMF.

The three-year stand-by was approved on December 22, 1999 in a total amount equivalent to SDR 2,892 million (about 3.9 billion U.S. dollars).

Turkey has so far drawn the equivalent of SDR 443.4 million (about 590 million U.S. dollars) under the stand-by.

The thirty-article second letter of intent sent by State Minister Recep Onal for Economic Affairs and Central Bank Governor Gazi Ercel is as follows:

''Public Debt Management And Interest Rates

11- Public debt management succeeded in financing large amounts of domestic public debt coming to maturity in early 2000, while maintaining the average maturity of public debt broadly unchanged with respect to end-1999. Owing to improved macroeconomic conditions, the interest rate on new domestic borrowing fell dramatically, with large expected savings in interest payments in the months ahead. Borrowing conditions have also improved on international markets, with the share of external borrowing in total borrowing rising to 17 percent in the first quarter, from 5 percent in the average of 1999. Nevertheless, contracting of public external debt has remained within the program ceilings. These results bode well for future fiscal developments, as they will facilitate a faster decline in the public debt-to-GNP ratio than initially anticipated.

12- With the goal of enhancing the liquidity of government paper, and thereby reducing the cost to the government (and taxpayers) of its funding operations, we have put in place a system of primary dealers for government debt (a structural benchmark). The primary dealers were selected in late April, and the system started operating on May 8.

Price And Incomes Policies

13- Price and incomes policies are an integral part of our disinflation program. In the second half of 2000, a number of actions will take place in this area.

-In line with the budget law, civil servants’ salaries were adjusted in June by the difference between inflation in the first five months of 2000 and 15 percent, plus a 2 percent compensation for the erosion of wages that took place until June. Civil servants’ salaries will be raised by 10 percent in the second half of 2000.

-In the area of private sector wages and prices, the Economic and Social Council will be reconvened as early as possible in June with the goal of reaching an agreement among the social partners on a formal joint declaration in support of the government’s disinflation targets, as well as on price and wage guidelines for 2000 and 2001 consistent with noninflationary growth, the protection of the purchasing power of employees, and the fiscal adjustment process.

-To remove the backward-looking elements in the formation of personnel costs in the private sector, parliament has approved a law to switch from backward-looking to forward-looking indexation in the determination of the minimum premium base on social security contributions for 2000–01. The resulting losses to social security institutions will be offset by raising the ceiling on contributions to four times the minimum level, as well as through the savings arising from the administrative and legal measures related to Bag Kur mentioned above.

-Regarding public sector wages, it is our intention that all wage increases in 2001-2002 be fully in line with the government’s inflation targets.

Monetary And Exchange Rate Policies

14- Monetary and exchange rate policies have been rigorously implemented in the first few months of 2000. The end-March performance criteria for net domestic assets (NDA) and net international reserves (NIR) of the central bank were met. Moreover, the no-sterilization policy has been consistently followed, with NDA always remaining in the program’s corridor (with the allowed exception of the predetermined periods including religious holidays). For the future, we remain committed to implementing the monetary and exchange rate policy framework described in the December 9, 1999 LoI, as well as to the performance criteria for NDA, NIR, and the contracting or guaranteeing of new external debt.

Structural Reform

15- Considerable progress has been made in furthering structural reform during the first months of 2000. While there have been delays, important results have been achieved in all key areas, and an Economic Reform Loan (ERL) has recently been extended by the World Bank in support of our structural reform agenda.

Privatization

16- In addition to the sale of 51 percent of Petrol Ofisi A.S., already mentioned in the March 10 LoI, two other key operations have taken place so far: the public offering of 31.5 percent of Tupras; and the sale of one GSM license. The receipts from the latter operation will amount to about US$2.5 billion (excluding VAT). Altogether these operations amount to US$ 5 billion, most of which is expected to be cashed this year. So far the total receipts cashed from these operations amount to almost US$1.25 billion. The receipts from the sale of the GSM license are expected to be cashed during the third quarter.

17- As to other operations, the tender of 20 percent of Turk Telecom was announced on June 13, but the sale may not be finalized before end- September (one month later than envisaged in one of the program’s structural benchmarks). Nevertheless, the target of privatization receipts of US$7.6 billion for 2000 remains within reach. Privatization operations will continue in 2001, and to this end, we have identified a new portfolio of enterprises that will be transferred to the Privatization Agency by end- August (a structural benchmark). This portfolio includes factories from TSFAS (sugar), CAYKUR (tea), MKEK (machinery and chemicals), and ETI holding. In addition, we intend to privatize parts of TEKEL (see below), the thermal generation plants and distribution companies which remain under state management after 2000, and plan further disinvesture of enterprises that started being privatized in 2000.

Tax Policy And Administration

18- Tax policy measures in preparation of the 2001 budget will be discussed during the third review of the program, with the goal of further improving the efficiency and equity of the tax system. In order to improve tax administration, a fully computerized system has started operating this year, contributing to the strong revenue performance observed so far. In addition, we have begun implementing a quarterly monitoring system of tax arrears in April (meeting one of the program’s structural benchmarks), and remain committed to reducing the stock of tax arrears—which stood at about 4.75 percent of GNP in March 2000 (of which a large share within the public sector)—by enforcing the provisions of the tax law (and without any tax amnesty).

Fiscal Transparency

19- In the area of fiscal transparency, 25 budgetary funds and 2 extrabudgetary funds have been closed between February and May (meeting with some delay another structural benchmark of the program). We will close another 20 budgetary funds by end-August (a structural benchmark). In addition to the 2 extrabudgetary funds already closed, 3 will be closed in July 2000 (a structural benchmark) and 2 more by February 2001, leaving only 6 extrabudgetary funds. The need for maintaining these remaining extrabudgetary funds will be further reviewed on the basis of the Public Expenditure and Institutional Review prepared in collaboration with the World Bank.

20- Afiscal transparency review from the International Monetary Fund took place in April, following the practice instituted in 1999, which has covered so far several industrial and emerging economies. We intend to publish the report of this mission by end-August 2000. Taking into account the report’s recommendations, as well as the recommendations of the committee on Restructuring Public Financial Management and Fiscal Transparency, the government agencies involved in fiscal management will enhance the contents of the Annual Program to be submitted to parliament in November together with the budget to state the government’s fiscal policies and commitments. As of 2001, this document will be complemented by a mid- year Economic and Fiscal Update. We will also submit to parliament before the end of the year a law on public finance and debt management that will: (i) define clear borrowing rules and limits for the public sector; (ii) widen the coverage of the budget by incorporating quasi-fiscal activities of the treasury, including on-lending operations; and (iii) set rules, limits, and accounting standards for the issuing of debt guarantees. Moreover, we intend to identify during the third review additional steps (to be taken in 2001–02) to implement the reports’ recommendations. This will include an overhauling of the relation between the central government, the state enterprises, and the social security institutions, including the issues of tax and social security contributions payments, and the resolution of the outstanding stocks of duty losses and tax arrears. As regards the identification of the government’s contingent liabilities, we will continue improving transparency by publishing the maturity structure of government guarantees and the terms of other contingent liabilities.''

[06] IMF APPROVES SECOND SUPPLEMENTARY LETTER OF INTENT (3)

The review was completed in light of among other things the observance of end-March performance criteria and the judgement of the IMF that the program remains on track. As a result of the review, Turkey will be able to draw up to the equivalent of Special Draw Right (SDR) 221.7 million (about 295 million U.S. dollars) from the IMF.

The three-year stand-by was approved on December 22, 1999 in a total amount equivalent to SDR 2,892 million (about 3.9 billion U.S. dollars).

Turkey has so far drawn the equivalent of SDR 443.4 million (about 590 million U.S. dollars) under the stand-by.

The thirty-article second letter of intent sent by State Minister Recep Onal for Economic Affairs and Central Bank Governor Gazi Ercel is as follows:

''21- Outside the central government sector, the central bank has for several years published its balance sheet weekly. By June 2001 we will start publishing annually the annual financial statement of the central bank, audited by an external auditor according to internationally accepted standards.

Agricultural Policies

22- Some key structural changes have already taken place under the program in this area, the most important one being the removal of credit subsidies from state banks. The effects of this removal have been cushioned by the sharp decline in market bank lending rates, including those on agricultural credit, caused by the improved macroeconomic framework.

23- Support prices have been raised broadly in line with targeted inflation. The support price for wheat was raised according to the mechanism specified in the December 9 LoI (a mark-up of 35 percent over international prices); this involved an increase close to targeted inflation (27.5 percent). A major reform has taken place with the parliamentary approval on June 1 of a law granting autonomy to agricultural sales cooperatives and their unions (ASCUs, a structural benchmark). As a transitional arrangement to facilitate the restructuring of these cooperatives, the law allows the use of some of the budget allocation for support to cooperatives to be used this year to finance support purchases of industrial crops. However, in order to contain the cost of this transitional arrangement, and to encourage efficient, market-driven restructuring, the ASCUs will only be granted budgetary funds upon acceptance by the restructuring board (or, until the board becomes operational, the Treasury and the Ministry of Industry and Trade acting on its behalf) of a business plan based on realistic market-determined prices, and purchased volumes no greater than what can be expected to be sold, within a total operating and investment budget not exceeding their own funds (including any funds borrowed on their own account) plus the 2000 budget allocation from the government.

24- Three new laws necessary to phase out the support price mechanism for tobacco and for reforming TEKEL will be enacted in 2000. The first law will separate TEKEL’s support purchasing unit from its other commercial units and will introduce an auction mechanism for the sale of tobacco, whereby the support purchasing unit of TEKEL will buy the unsold tobacco at a discount of at least 15 percent from the lowest auction price for comparable qualities. The second law will de-monopolize the production of alcoholic spirits thereby allowing private sector entry into the industry. The third law will enable the privatization of TEKEL’s production facilities for spirit, salt, and tobacco products. The divestiture of TEKEL’s commercial assets will start in 2001 and will be completed by end- 2002.

Banking

25- The reform of bank supervision structures and regulations has continued in early 2000. The Board of the Bank Regulation and Supervision Agency (BRSA) was appointed at end-March, meeting one structural performance criterion. The board is actively at work and all efforts will be made to have the BRSA fully operational ahead of the program’s deadline (end-August, an action which remains a structural performance criterion).

26- In the area of bank regulation:

-All regulations needed to implement by end-June 2000 the consolidated capital adequacy and foreign exchange exposure limits specified in paragraphs 54 and 61 of the December 9 LoI have been introduced, meeting a structural performance criterion.

-The central bank introduced in early May a 100 percent reserve requirement on foreign exchange positions in excess of the prudential limits (a structural performance criterion for end-June).

-Progress is also being made in issuing regulations on internal risk management systems and in amending capital adequacy rules to take into account market risk; we expect these regulations to be introduced according to the original schedule set out in the December 9 LoI (end-June, a structural benchmark).

-The securities valuation regulation was issued on May 18, 2000 (a structural benchmark).

-The reporting of quarterly consolidated accounting (originally expected by end-April; a structural benchmark) has been delayed. We now expect to issue the circular needed to require quarterly reporting on a consolidated basis to be issued by end-June (a structural benchmark). The World Bank is providing technical assistance to improve further the accounting rules during the second half of 2000.

27- Regarding state banks, the interest rates paid by the treasury on the stock of its liabilities towards the state banks (the so called duty losses) had to be adjusted, with respect to the figures indicated in the December 9, 1999 LoI, owing to the sharp change in the structure and level of interest rates. Accordingly, the spread over treasury bill rates used to compute the interest rates on the duty losses has been lowered from 35 percent to at most 26 percent for Ziraat, and raised from 21 percent to at most 26 percent for Halk Bank. In addition, Ziraat Bank and Halk Bank will be allowed to adjust their lending rates freely as long as these rates are kept at least 5 percent higher than treasury bill rates. As part of the medium-term program to restructure the state-owned bank sector, we intend to send to parliament legislation that would allow the commercialization and eventual privatization of all state banks (including their transformation into joint-stock companies). We are also in the process of preparing an action plan to resolve the stock of duty losses on the books of the state banks. We expect that these reforms will be supported by a Financial Sector Adjustment Loan from the World Bank.

28- As regards the resolution of the eight banks currently owned by the Saving Deposit Insurance Fund (SDIF), on May 31 we have selected a financial consultant firm to assist us in the implementation of the financial restructuring plans worked out by the SDIF in April. The consultant is expected to prepare the appropriate strategy for completing the resolution of these banks while addressing the government’s objectives of least cost to taxpayers, systemic stability and maximum asset recovery. We expect the consultant’s report to be completed and delivered to us by July 31, 2000. By August 15, based on the consultant’s report, we will decide on the specific approach to restructuring the above banks. Specific deadlines for implementing the restructuring strategy will be agreed during the third review of the program. In the meantime, the staff of the SDIF is in the process of setting up a special unit that will be in charge of the recovery of the bad loans currently in the portfolio of the banks. This asset management unit will be operational by end-June 2000, with the aim of completing the transfer of bad assets by August 15, 2000.

29- Over the medium term, the Turkish banking system will have to adapt to an environment of lower inflation, real interest rates, and bank spreads. The size of the bank loan market, which is small at present, will likely rise, and with it the challenges and opportunities that could be potentially faced by banks. The increase in consumers’ credit in the last few months, in a market characterized by more intense competition, is a first sign of this development. The changes in bank regulation mentioned above, together with the strengthening in the implementation of bank supervision that will follow the setting up of the BRSA, are necessary steps to facilitate this evolution. Changes in the area of reserve requirements and of the taxation of banks could also be helpful. In this respect, we intend to lower as of January 1, 2001 the reserve requirement coefficient, so as to reduce the burden of reserve requirements, which is above that of other banking systems competing with Turkish banks. Moreover, the deductibility of loan loss provisioning will be examined with a view to phasing it in starting in 2001. This issue will be discussed during the third review, as part of the discussions on the 2001 policy package.

30- Finally, we intend to improve the availability of statistics on developments in the monetary and banking area. As of end-July 2000, we will enhance our system of collection and publication of aggregate statistics on bank lending rates, by requesting from commercial banks information on volume-weighted interest rates used in their credit operations, for the main types of credit facilities and currencies. The delay in the publication of monetary survey data, which now exceeds three or four months, will be reduced to no more than two months.''

[07] TREMOR IN MARMARA ISLES -ONE PERSON DIES OF HEART ATTACK IN GEBZE

31-year-old Vilayet Tutar, residing on the fourth floor of an apartment block in Gebze, had a heart stroke due to a sudden fear from the tremor, and died as her husband rushed her to a nearby hospital.

Meanwhile seven people, who jumped out of their windows and balconies in panic, suffered injuries and were hospitalized.

[08] COMPATIBLE BONE MARROW FOR TURKISH CYPRIOT LEUKAEMIA BOY FOUND

Sua Saracoglu, Kemal's father said the doctors had given him the good news on Wednesday, and that he and his son were more hopeful now than ever before.

''Now, what we hope for is that the bone marrow to be transplanted to Kemal will help him fight the disease. All we can do is pray,'' Saracoglu said.

[09] TURKEY-GREECE-EU WORKING GROUP

The working group will be formed within the framework of an accord to be reached at the end of the meeting, in which EU Commission Foreign Affairs Director Catherine Day, Energy Ministry Undersecretary Yurdakul Yigitguden, Greek Undersecretary Antonio Papathanassopulos, various high level officials and experts are participating.

EU Commissioner in Charge of Foreign Affairs Christopher Patten suggested that a 'Working Group' which would be formed with the joint initiatives of Turkish Foreign Minister Ismail Cem and his Greek counterpart George Papandreu, may also discuss issues pertaining to technical cooperation in transportation of oil and natural gas, information exchange, and pipeline projects.

At Friday meetings, the sides will commence the initial studies to outline the fields in which the two countries could cooperate, and define their national interests, and the projects that seem likely to be developed jointly by Turkey and Greece will be revised.

The EU Commission attaches great importance to the cooperation relations to be developed between Turkey and Greece for the transportation of Central Asian energy sources to European markets, and believes that the latest progress that the two countries have made in their bilateral relations will contribute also to such cooperation initiatives and joint projects.

The participants are expected to hold a signing ceremony after a press conference they are to hold at the end of their meeting, and officialize the establishment of the 'Working Group'.

Officials say that investments to maintain the suitable infrastructure to transport Central Asian energy sources to European markets via Turkey and Greece, could get started by 2001.

[10] PRIME MINISTER ECEVIT RECEIVES WOLF, THE U.S. PRESIDENT'S SPECIAL ADVISER TO CASPIAN BASIN

Prime Minister Bulent Ecevit received Wolf in Prime Ministry. Marc Parris, the U.S. Ambassador to Ankara, was also present at the meeting.

Speaking after the meeting which lasted half an hour, Wolf said they exchanged views on the recent stage regarding Baku-Ceyhan oil pipeline project, and Turkmen Natural Gas project.

Wolf said Prime Minister Ecevit was interested in the works he made with the regional countries regarding implementation of east-west energy corridor.

Pointing out that basic engineering works to materialize Baku-Ceyhan pipeline were started, Wolf stressed that the U.S. wanted Turkey to have source diversity to meet is natural gas need.

Wolf said Turkey's purchasing natural gas from Caspian region was important but that there were steps it should take in this respect. He urged Turkey to take steps to protect its own natural interests in energy and to meet the needs of consumers.

Wolf said he hoped that the project envisaging natural gas purchase from Turkmenistan would go on its right track.

Responding to another question, Wolf said he would not convey a specific message from the U.S. President to President Ahmet Necdet Sezer.

Wolf is expected to depart from Turkey after President Sezer receives him.

[11] TURKEY, GREECE, AND EU COMMISSION JOINT WORKING GROUP SET UP

Catherine Day, the EU Commission Foreign Relations General Director, Yurdakul Yigitguden, Energy Ministry Undersecretary, and Antonio Papathonossopulos, Greek Undersecretary attended the signing ceremony.

In a joint news conference, it was stated that the working group will have very important function, and that the first step of a great project was in question.

The sides decided to determine an action plan and calender regarding the works by the end of this year.

[12] FOREST FIRE ON SAMOS ISLAND EXTINGUISHED

Acting Mayor of Kusadasi Tahir Bayraktas told the A.A correspondent that the fire started blazing in the forest land known as the Pythagorion, that they immediately contacted with their Greek counterparts after detecting the fire, in accordance with the 'Sistership Protocol' that Kusadasi and Samos had signed, told Greek officials that they were ready to help them with the blaze by sending volunteer civilians over to the island.

Noting that they had made an immediate situation assessment with Gokhan Erdonmez, Police Chief of Kusadasi, Bayraktas said that they soon received a phone call from Samos, saying that the fire had been extinguished.

[13] ANTALYA AND MUGLA ENJOYS TOURISM BOOST

In the first six months of the year, the number of tourists coming to Antalya only by airways topped 1 million. The number of tourists visiting Mugla and vicinity, including Fethiye, Bodrum, and Marmaris, increased by 25 percent in 2000 as compared to the first six months of 1999.

Charter flights to Antalya Airport in the first six months of the year, brought in 1 million 187 thousand 599 foreign tourists, 404 thousand 374 of them only in the month of June. These figures indicated a considerable increase against the previous years.

German tourists again rank first in the list of vacation frequenters of the Antalya region. In June 2000, the town and vicinity hosted 163 thousand German tourists.

The number of tourists visiting Mugla and environs, Bodrum, Fethiye, and Marmaris in particular, reached 487 thousand 532 in the first six months of the year. This indicated an increase by 25 percent as compared to the same period of 1999.

The British occupy the list of Mugla fans, with 186 thousand tourists coming to the region in the first six months, and they are followed by Germans with 79 thousand tourists, the Dutch with 36 thousand, and by Israelis with 21 thousand.

[14] EXPORTS OF AUTOMOBILES DECREASE 26 PERCENT IN JUNE

The Uludag Exporters' Unions (UIB) Secretariat General said on Friday that the increase in exports from the automotive sector remained at about 8.5 percent in January-June 2000 period.

It said the six-month increase in exports became 8.5 percent from 1 billion 213 million to 1 billion 317 million U.S. dollars.

The figures for exports from the automotive sector in the January-June 2000 period are as follows:

---- Exports Item (thousand U.S. dollars) ----------------- ----------
Tractors 32,414 Bus-Minibus-Midibus 156,337 Automobiles 342,190 Motor Vehicles for Transporting Goods 12,217 Special Purpose Motor Vehicles 2,029 Towing Vehicles 436 Work Machines 11,932 Vessels and Floating Vehicles 60,359 Aircrafts 34,048 Bicycles and Motorcycles 8,313 Agricultural Machines 2,854 Tanks and Armored Vehicles 18,288 Special Purpose Towing Vehicles 224 Automotive By-Industry 665,449 --------------- -----------
TOTAL 1,317,095
----

[15] INCREASE RECORDED IN NUMBER OF TOURISTS VISITING TURKEY

Number of foreign tourists, in five months covering January-May period, increased by 25.4 percent.

State Statistical Institute issued a written statement and said a total of 986, 376 tourists visited Turkey in May this year.

Number of visitors was 691.365 this time last year.

In January-May period, which covers the first five months of this year, number of tourists visiting Turkey was 2.831 million.

In the first five months of last year, number of foreign tourists was 2.258 million.

Anadolu Agency: News in English Directory - Previous Article - Next Article