Anadolu Agency: News in English, 00-11-29

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NEWS

29 NOVEMBER 2000 Wednesday

CONTENTS

[01] TURKEY-PRESS SCAN

[02] WORLD BANK MEETING (1)

[03] WORLD BANK MEETING (2)

[04] WORLD BANK'S TURKEY REPORT SAYS POSSIBILITY OF TURKEY'S MARKING SUCCESS

[05] WORLD BANK MEETING (2)

[06] FOREIGN TRADE STATISTICS

[07] NINTH PRESIDENT DEMIREL RETURNS TO TURKEY FROM U.S.

[08] FOREIGN TRADE STATISTICS (2)

[09] AMBASSADOR HAKTANIR SAYS MORE THAN 40 TURKISH

[10] TREASURY UNDERSECRETARY DEMIRALP:

[11] FOREIGN MINISTRY SAYS THAT PROTEST OF TERRORISTS IS AN ACTION

[12] FM SAYS IT IS TRNC PRESIDENT DENKTAS WHO WANTS MOST

[13] NINTH PRESIDENT DEMIREL ARRIVES IN ANKARA

[14] WORLD BANK'S VICE PRESIDENT LINN SAYS RECENT FLUCTUATIONS

[15] WORLD BANK'S TURKEY REPORT SAYS GOVERNMENT SHOULD MAINTAIN AND

[01] TURKEY-PRESS SCAN

HURRIYET (LIBERAL)

LULE PRESENTED WITH ''CONSTANTINOS CALLIGAS AWARD''
Zeynel Lule, the Hurriyet Newspaper's Correspondent in Brussels, was presented with ''Constantinos Calligas Award'', one of the most distinguished awards of the Greek press world. Lule was given his award in a ceremony in Salonica, Greece, by Helmuth Hetzel, the Chairman of Association of European Journalists (AEJ). Addressing the award ceremony, Lule said, ''this award is very important to me. First of all, I have been struggling for it with my news for years. Secondly, this award was given to be by the AEJ's Greek section. This award has encouraged me to carry European values into my own country.''

MILLIYET (LIBERAL)

AMNESTY DISCUSSED AT LEADERS SUMMIT
Leaders of three political parties forming the coalition government came together once again yesterday. Latest developments in economy, amnesty and TV programs in Kurdish launguage were high on the agenda of the leaders summit. Deputy Prime Minister Husamettin Ozkan was also in attendance at the summit.

SABAH (LIBERAL)

BAHCELI SAYS RADICAL CHANGE IS NECESSARY
Leader of the Nationalist Movement Party (MHP) Devlet Bahceli said that a radical change was necessary in the use of public resources, investment and finance policies and privatization. The regulations carried out in banking and financial sectors bothered certain circles, Bahceli said and added that the government would not make any concessions on the economic stability programme.

CUMHURIYET (LEFT)

GERMAN DEFENSE EXPERT CRITICIZES EU MEMBERS FOR FAILING
TO RECOGNIZE TURKEY'S STRATEGIC IMPORTANCE
Strategic Analysis Institute Chairman Dr. Holder Mey who worked as an expert at the German Defense Ministry for long years, pointed to Turkey's strategic importance for the United States and the European Union. ''The Unites States better grasps Turkey's importance than the EU does. The EU must be more willing to accept Turkey to the Union than Turkey is willing to join the Union,'' he commented.

RADIKAL (LEFT)

JUSTICES COMES LATE
15 young people from Manisa who were detained and put into jail five years ago were acquitted after it became clear that they had been interrogated under torture. The suspects were between 14 and 29 years old. The acquitted young people are now trying to build a new life for themselves. While most of them continues their education, three of them had to flee from Turkey due to police pressure.

YENİ BİNYIL (LIBERAL)

AGCA: ''MEZARCI IS INSANE''
Mehmet Ali Agca who was imprisoned in Tartal Prison in Istanbul after being extradited from Italy, said that Hasan Mezarci who declared himself as the Messiah, was insane. Agca said, ''Vatican is interested in my messiahship. They approved my messiahship and suggested me to become a king. Vatican is the only interlocutor on the issue of messiahship.''

TURKIYE (RIGHT)

SCANDAL IN EUROPEAN PARLIAMENT
During Foreign Minister Ismail Cem's address to European Parliament, two DHKP-C militants shouted slogans and waved banners protesting Turkey. They shouted, ''murderer Cem''. When the European parliamentarians failed to react, militants continued their protest but were later detained.

MARKETS TAKING EXAM
The stock exchange national index decreased by 954 points and the market received more than one billion U.S. dollars foreign currency yesterday. Central Bank Governor Gazi Ercel said that the fluctuation in the money markets were temporary and that there was no need to take any measure.

ZAMAN (CONSERVATIVE)

STOCK EXCHANGE COLLAPSES, INTEREST RATES RISE
Excessive demand for foreign exchange currency and high interest rates turned the markets into battlefields. The stock exchange reduced to its minimum level in this year with a 9.01 percent decrease yesterday. Prime Minister Bulent Ecevit said those developments stemmed from the interest lobbies, and that they had taken necessary measures against them. Experts say that the panic would continue if overnight interest rates won't reduce.

SAME SSK, SAME SUFFERING
Even the appointment system which aims to remove the queues in the Social Security Authority (SSK) hospitals failed to solve this problem. Patients who can get an appointment for at least two days later after they applied, are still waiting in the queues.

EXTREME NATIONALISTS TO LEARN CHINESE
After the MHP's decision to open representations in China and Russia, the extreme nationalist young people have started learning Chinese and Russian.

STUDENTS OF MANISA CASE ACQUITTED
The ''youngsters from Manisa'' who have been tried by the Izmir State Security Court since 1995 on charges of ''being members of illegal organization'' were acquitted. The court had sentenced ten policemen to between five and ten years in prison on charges of torturing the youngsters.

[02] WORLD BANK MEETING (1)

Making the opening remarks of a conference on ''Turkey Report: Structural Reform and Stable Growth'' which was organized by World Bank, Treasury and Association of Turkish Banks, Linn expressed his pleasure with visiting Turkey.

Linn said, ''it is a plasure to deliver a speech here and meet with friends although the weather conditions are not so good and there are some crisis and fluctuations in the markets.''

Stating that Turkey would experience several fluctuations while focusing on the medium term agenda, Linn said, ''we should take some lessons from the past. We should not forget in such fluctuant and unstable days that Turkey does have very important opportunities in early 21st century.''

Stressing that Turkey had a young population, dynamic private entrepreneurship and important geopolitical economic situation, Johannes Linn said, ''Turkey is one of the leading emerging markets. Turkey does have the potential to enter the European Union and it will be a regional leader in the world economy.''

(To be continued)

[03] WORLD BANK MEETING (2)

Speaking to reporters during the conference on ''Turkey Report: Structural Reform and Stable Growth'' which was organized by World Bank, Treasury and Association of Turkish Banks, Demiralp said, ''the programme continues. We don't have any doubt about the programme. We consider these as temporary incidents. The market will regain its balance within itself.''

Demiralp said that the talks with the International Monetary Fund (IMF) on implementation of the programme were under way, and the IMF's support to the programme continued.

''First of all, we will take the first tranche of the 400 million U.S. dollar financial sector loan from the World Bank earlier than the schedule. It will be possible to rapidly use it in December. Besides, it is possible to take the IMF's third and fourth tranches of loan earlier than the schedule. Besides, the IMF and we are seeking other opportunities. For example, talks with the IMF on extension of the Structural Reserve Facility (SRF) loan are continuing and they continue their works on support. At the moment, we are encountering a temporary incident. We think that this is a temporary incident which can't affect our programme,'' he said.

Responding to a question, Demiralp said that the talks with the IMF on supplementary loan and that the IMF was closely flowing developments in Turkey, and it would set an amount for the loan by taking into consideration the situation in Turkey.

Demiralp added that the government would announce all measures for 2001 in near future.

(To be continued)

[04] WORLD BANK'S TURKEY REPORT SAYS POSSIBILITY OF TURKEY'S MARKING SUCCESS IN CURRENT REFORMS IS VERY HIGH

The World Bank's economic report titled ''Turkey Report: Structural Reforms for Sustainable Growth'' was announced in a meeting held in Istanbul.

The report prepared by the World Bank in cooperation with the Treasury Undersecretariat and Turkish Banks' Union, said that Turkey is facing three important economic questions.

The ensurement of basic economic balances by sustainable and lasting financial measures and the supporting of the productivity by the lifting of the incentives which are high and which damage the market balances are the main issues, the report noted.

The report stated that Turkey's economy has continued to exist in a sensitive atmosphere in which continual financial imbalances, chronic high inflation and sharp increases and decreases in production prevail, despite the effective successes marked for 20 years.

The report emphasized that Turkey's not managing to continue the high growth rate is closely related with not having macro-economic stability, besides many other factors.

The financial policies which cannot be sustained, caused a pressure on the Turkish lira (TL) and in the end, led to chronic high inflation, the report said.

The report noted that the financial policies implemented in case of crisis could not have a relieving impact on the private sector.

The indicators show that the previous efforts exerted to ensure economic stability were definitely unsuccessful because the structural problems that led to financial deficit were not taken into consideration, the report stated.

The report said that Turkey can accomplish the current reform program which was put into effect in the middle of 1999 because the reform program includes most of the structural problems.

The new program gives priority to the structural reforms including economic regulations, structural financial reforms, finance, infrastructure and privatization, the report emphasized.

The report said that taking financial measures and accelerating the structural reforms and privatization are the main elements of the program.

The current momentum in the structural reforms can lead to a lasting decrease the financial deficit and reduce the inflation, the report noted.

The report stated that the government launched initiatives to make reforms in social security system and that this reform is very important.

The system was to bankrupt with a deficit expected to be equivalent to 3 percent of the Gross National Product (GNP) in 1998, to 5 percent of the GNP until 2010, and to 10 percent of the GNP until 2030, the report said.

The report emphasized that this deficit was taken under control and the government has gained time to prepare the path heading for a multi-lateral social security system.

Within the framework of the reform program, the credit subsidies were ended, the report noted.

The report said that the price incentives will be gradually lifted in parallel with the direct income incentive given to the farmers.

The privatization which gained momentum especially in telecommunication and energy sectors, has an important place in the stabilization process, the report added.

(To be continued)

[05] WORLD BANK MEETING (2)

''Whatever will the atmosphere in Turkey be, we will continue to support Turkey,'' said Linn.

Speaking in the conference on ''Turkey Report: Structural Reform and Stable Growth'' which was organized by World Bank, Treasury and Association of Turkish Banks, Linn said that important progress was recorded recently in implementation of the economic programme of the government.

Stressing that the success of Turkey won't be to the advantage of only their citizens, Linn said that this will represent an example and stability in the region.

''This means that this will also develop the world economy, the government is also aware of the incredible potential of the economy and it started to implement the economic reform programme,'' said Linn. Linn stressed that the high inflation in Turkey should be decreased, the high interest rates should be decreased, sustainable financial policies should be made stable, productivity has to be increased, growth rates have to be increased and structural refornms should be undertaken to attract foreign capital.

The inequality in the distribution of income has to be overcome and progress has to be recorded in social security and education fields, said Linn.

Reminding that Turkey opened its economy to world markets 20 years ago, Linn said that Turkey is at the second stage of this journey and it carries out structural and institutional reforms. Linn said the telecommunication and energy sectors should will also be transparent. ''The public institutions of Turkey will strengthen and it can draw the foreign capital needed by Turkey. The government recorded important progress in this field, '' he said.

Recounting that the Banking Regulation and Inspection Council started to work, Linn said that ''Turkey fights with corruption, the recent developments are examples of that.''

Stable economic growth will be provided with reforms, said Linn and noted that the reforms in the financial sector will also increase the productivity.

Linn recounted that the World Bank gave 2 billion dollars from June 1999 to July 2000 and it gave aid to Turkey for the quake.

(END)

[06] FOREIGN TRADE STATISTICS

The exports increased by 4 percent compared to same period last year and the imports climbed by 35.1 percent.

The State Institute of Statistics (DIE) said that the foreign trade deficit increased 97.6 percent to 18 billion 958 million U.S. dollars, and the rate of exports meeting imports decreased from 66.7 percent to 51.4 percent.

In the same peroid last year, the total exports were 19 billion 249 million U.S. dollars, the total imports were 28 billion 845 million U.S. dollars and the foreign trade deficit was 9 billion 595 million U.S. dollars.

The realizations in foreign trade figures as January-September period in 1999 and 2000 according to the DIE data are as follows: (million U.S. dollars) ---- 1999 2000 Difference JAN-SEPT JAN-SEPT (percent) ------------ ----------- -----------
Exports 19.249.526 20.010.548 4.0 Imports 28.845.286 38.968.659 35.1 Deficit -9.595.760 -18.958.111 97.6 Rate of Meeting (%) 66.7 51.4 ----

[07] NINTH PRESIDENT DEMIREL RETURNS TO TURKEY FROM U.S.

Speaking at Istanbul's Ataturk Airport, Demirel said that the part of the Committee's meeting in New York was completed and the Committee will visit the region before December 15 and meet with the administrators of the concerned states in the region.

''The mission of the Committee is to find out the reason of the violent acts and to find methods of stopping them. A report will be prepared on these issues. The Committee will finish its mission within six months,'' said Demirel.

Demirel said that he proposed the Committee to hold the next meeting in Turkey, adding that no decision has been taken about it.

Responding to questions of journalists who told him that the clashes still continue in the region, Demirel said that ''the Committee is against violence. We wish the sides to make peace and come together around a negotiation table.''

When another journalist asked him about his impressions, Demirel said his impressions are positive, adding that the Committee is an harmonious one and it is aware of the world's affairs.

When a journalist asked him about his views regarding the news published about Ali Sener, Demirel's brother-in-law, Demirel said that ''Ali Sener or another relative of mine is a citizen of this country like you are. They do not deserve any privileges as they are close to me or they should not be targetted, too. They have the right to treated as others are.''

[08] FOREIGN TRADE STATISTICS (2)

According to the State Institute of Statistics (DIE) data, the imports of capital goods, which were 6 billion 96 million U.S. dollars in the same period in 1999, increased to 8 billion 12 million U.S. dollars. The imports of intermediate goods climbed from 19 billion 15 million U.S. dollars to 25 billion 720 million U.S. dollars.

In the same period, the imports of consumer goods increased from 3 billion 453 million U.S. dollars to 5 billion 83 million U.S. dollars. The imports of consumer goods rose by 47.2 percent and its share in total imports became 13 percent.

As of the January-September 2000, the exports of agricultural and forestry products decreased 23.6 percent while the exports of mining and quarry products increased 5.7 percent.

The exports of manufacturing sector products rose 6.3 percent while the exports of fishery products decreased 42 percent.

Turkey's exports to the European Union (EU) countries increased 2.3 percent in the first nine months of 2000. Turkey's exports to the European Free Trade Area (EFTA) countries decreased 13.5 percent.

Turkey's exports to the European and Commonwealth of Independent States (CIS) countries increased 4.8 percent and its exports to the Black Sea Economic Cooperation (BSEC) countries climbed 9.4 percent.

In the same period, Turkey's exports to Economic Cooperation Organization countries climbed 2.6 percent and to the Turkish Republics rose 2.7 percent. Its exports to the Organization for Islamic Conference (OIC) countries dropped 11.7 percent.

In the January-September 2000, Turkey's imports from the EU member countries increased 26.3; her imports from the EFTA countries climbed 27.2 percent.

In the same period, Turkey's imports from the Turkish Republics increased 62.2; her imports from the BSEC countries climbed 62.3 percent; and her imports from the CIS countries rose 60.4 percent.

[09] AMBASSADOR HAKTANIR SAYS MORE THAN 40 TURKISH

Haktanır stressed that provoking anti-Turkey views, like The Independent does by covering the Armenian claims of genocide, encourages racial discrimination, hatred and violence.

Pointing to the article written by Robert Fisk in the newspaper, Haktanır said that ''the Turkish diplomats were the victims of a feud encouraged by anti-Turks whose views were also shared by Fisk.''

Recounting that nobody had cursed the killings of the Turkish diplomats by the Armenian murderers, Haktanır said that nearly three million Turks died during the First World War, adding that Armenians who voluntarily became the killers of the foreign military troops in Anatolia at those times, made most of these killings.

Haktanır said that his own grandfather came from eastern Van province, stressing that Armenians either killed or forced to leave the Turkish and Jewish population in 1915.

Haktanır said that Van faced the plundering of the Russian troops, adding that the effort of removing Turks from the region was a part of the Russian plan of moving into Anatolia. Muslim and Jewish families were robbed, women were raped and people including women and children were killed by the Armenian gangs in the region.

Stating that the records of the ruthless massacres committed by the Armenians can be seen in the memories of Russian commanders who were charged in this front, Haktanir said many Turks of his generation had listened from their families the bitter memories of the massacres committed by the Armenians in Eastern Anatolia and by the occupier Greek forces in Western Anatolia.

Haktanır said that Robert Fisk tries to accuse Turkey today like in the past, adding that he also had accused his own government, the Wall Street Journal, American academicians, the U.S. President Clinton, French President Jacques Chirac and Germany while doing that.

Haktanir added that being in the forefront of a historical enmity, and starting a campaign against a country and its people who were just trying to save the motherland from the occupation of foreign forces will just result in creating enmity and discrimination between the races, and opening the way to violence.

Haktanır had earlier sent a response to Fisk and the newspaper which defended the view that Armenians should also have been included in the commemoration day of the genocide on Jews that will firstly be held in Britain on January 27, 2001.

[10] TREASURY UNDERSECRETARY DEMIRALP:

The World Bank's economic report titled ''Turkey Report: Structural Reforms for Sustainable Growth'' was announced in a meeting held in Istanbul.

Speaking in the meeting, Demiralp said that the reform program put into effect by the government, targets at overcoming imbalances.

Ensuring a certain financial adjustment, carrying out a monetary and foreign currency policy in harmony with the national policies, and fixing the revenue policy of the public sector in parallel with the future expectations are among the targets of the program, Demiralp noted.

Demiralp stated that the implementation of reforms like the social security system and the public expenditures management, and acceleration of privatization have importance.

Within this framework, they continue to take concrete measures to accomplish the reform program, Demiralp emphasized.

Demiralp said that the World Bank's report drew the attention to possible liabilities that the government guarantees which are given to public debts and energy sector outside the consolidated budget, can cause on the budget.

Demiralp said, ''we continue to exert works on the measures that can be taken regarding this issue and the risks that can occur due to this serious problem. At the first stage, we limited the guaranteed borrowing of the public institutions.''

Touching on the initiatives carried out in energy and agriculture sectors, Demiralp said that they foresee providing 600 million U.S. dollar loan from the World Bank to support the agricultural reform and to decrease the negative effects which can occur at the beginning.

Demiralp noted that the preparation works for this loan continue and that the agreement is planned to be signed at the beginning of 2001.

The first financial sector adjustment loan, the discussions of which continue between the government and the World Bank, aims at supporting the initiatives to end deficits being burden to economy by privatizing the public banks and by making institutional reforms in the banking sector, Demiralp said.

Demiralp stated that they expect the agreement for the 778 million U.S. dollar loan to be ratified by the bank next December.

The works carried out jointly by the World Bank have been accelerated in the recent years, Demiralp emphasized.

Demiralp said, ''our country has to make structural changes while implementing the economic program. If it does not make these changes, the disinflation program cannot be a lasting one. Here, the World Bank has an important role. By the World Bank, Turkey has reached the point to make important structural changes in important sectors.''

The World Bank extended 1 billion U.S. dollar emergency loan to Turkey following the massive earthquake that hit Turkey in August 1999, Demiralp noted.

Demiralp stated that a loan worth of 750 million U.S. dollar was also extended to Turkey within the framework of the program.

Demiralp continued, ''besides, a 5 billion U.S. dollar frame agreement as signed. The discussions on this agreement will be made on December 21. After this loan is discussed, it will be open to the sectoral use in three- year perspective. These are very important developments for Turkey. Today, turkey has become a country which takes highest debts from the World Bank and uses the bank's resources. This is an important support for the economic reform program.''

The government is very determined to implement the program, Demiralp noted.

Demiralp said, ''the targets are obvious. A deviation or change in the targets is not possible. Because, there is not an alternate program.''

Almost one year has passed since the program was put into effect, Demiralp stated.

Demiralp said, ''when we take into consideration the days that have passed since the program was put into effect, we can say that many important developments were marked in financial structural issues. But, these developments are not enough.''

''What is important is decreasing the inflation to one-digit figure in the end of these three years. This is the target of the program. The developments and measures have importance in 2001 and 2002,'' Demiralp added.

[11] FOREIGN MINISTRY SAYS THAT PROTEST OF TERRORISTS IS AN ACTION

Speaking in a weekly press briefing, Huseyin Dirioz said that the protest against Foreign Minister Cem also included threatening of Cem, adding that ''it is not possible to approve that.''

Recounting that the Chairman of the EP Foreign Affairs Committee and other members of the Committee expressed their uneasiness over the protest just after the incident, Dirioz said that the members of the Committee also said that necessary measures have to be taken to overcome the lack of security.

Dirioz said that Turkey's Permanent Representation in EU monitors the developments about the issue, adding that the Representation will be informed about the developments.

[12] FM SAYS IT IS TRNC PRESIDENT DENKTAS WHO WANTS MOST

Evaluating the statements of the opposition Republican Turkish Party (CHP) leader Mehmet Ali Talat in the Turkish Republic of Northern Cyprus (TRNC), a Foreign Ministry official said that the claims of Talat don't reflect the truth.

''It is Mr. Denktas who wants most to have a solution on the island,'' said the official and stressed that none of Denktas' views were taken into consideration in the non-paper submitted by the U.N. Secretary General Kofi Annan to both sides. This paper even foresees establishment of a unitary state in Cyprus by taking a step back even from the federation,'' said the official.

Talat had claimed that ''Denktas considers defending the short term interests of Turkey as a priority rather than being a representative of TRNC people and he wants the division of Cyprus and unification of the island's northern part with Turkey.''

[13] NINTH PRESIDENT DEMIREL ARRIVES IN ANKARA

Staging a press conference, Demirel, who arrived in Ankara, said, ''Turkey and the world fell uneasy about the sudden start of the violence in the Middle East and the death of more than 300 Middle Eastern people when the Middle East peace process was to end or when everybody hoped so. A decision was taken on October 17. It was decided to set up a committee which can determine the efforts to be carried out in the region to prevent violence from now on and to make recommendations.''

Demirel continued, ''I was included in that committee comprised of five people. The committee held its first meeting on November 26 and the second in November 27. The committee will continue its efforts from now on by visiting the region. I think the committee will visit the region in the first fifteen days of December. Of course, the conditions continuously change. The committee will fulfil its responsibilities within framework of principle of impartiality.''

When asked whether or not what kind of concrete steps will be taken for Middle East peace was brought to the agenda in the meetings, Demirel said, ''the mission of the Committee is not the Middle East peace process. It has a mission within framework of this process. The measures that can be taken to stop violence and to prevent violence from occuring again were recommended.''

Responding to a question on what Turkey's contributions to the stopping of the violence and peace process can be, Demirel said, ''there is nothing requested from Turkey. The mission of the Committee is obvious. The Committee is an international one. The issue is an international one.''

Upon another question, Demirel said, ''the meeting was very beneficial. The meeting was about how the Committee will work and what it will do from now on. The sides were listened. The representatives of the sides were listened. That is, both the representatives of Israel and Palestine were listened and the efforts which will be exerted from now on was decided. The next step will be visiting the region.''

When asked how the early election decision in Israel will affect the peace process, Demirel said, ''the continuation of violence will be very wrong because it will not only affect the works of the Committee but also it will change the dimensions and create situations which cannot be solved. How will the election affect the process? It is not possible to evaluate this at this stage.''

''Because, it is not obvious when the election will be held, whether this will be the election of prime minister, or the election of parliament. The election held immediately will bring forward different results and an election held six months later will bring forward another result. But, the statement that election will be held is an important incident,'' Demirel added.

When asked whether or not he believes the Committee's efforts will lead to certain results, Demirel said, ''there is not certainity in political incidents. There is only good will and effort. Reaching a certain result in political incidents can be understood after the incident is over.''

[14] WORLD BANK'S VICE PRESIDENT LINN SAYS RECENT FLUCTUATIONS

Responding to questions of journalists after speaking in the conference on ''Turkey Report: Structural Reforms for Sustainable Growth'' which was organized by World Bank, Treasury and Association of Turkish Banks, Linn said that they prepared a credit package of five billion dollars for the next three years, adding that they expect this package and the Financial Sector Reform Loan to be taken up by the World Bank's Executive Board till the beginning of the next year.

Linn recounted that 2.4 billion dollars of the 5 billion dollars has been planned to be given to Turkey for structural reform, commenting that structural reforms in the fields of financial sector, agriculture, social security and infrastructure carry great importance.

[15] WORLD BANK'S TURKEY REPORT SAYS GOVERNMENT SHOULD MAINTAIN AND

The World Bank's economic report titled ''Turkey Report: Structural Reforms for Sustainable Growth'' was announced in a meeting held in Istanbul.

The report prepared by the World Bank in cooperation with the Treasury Undersecretariat and Turkish Banks' Union, said that credibility requires determined and courageous steps.

The financial measures process should be continued in the long term, the report noted.

The report stated that the government should benefit from the former successes and implement the structural parts of the reform program.

Despite the significant developments marked in social security, banking and other sectors, the hardest structural problems can be faced again in the future, the report said.

The report noted that the targets and schedule of the reforms should be made public and these targets and schedule should be kept.

Significant developments have been marked in social security reform, the report stated.

The report said that additional changes are compulsory in the social security system.

In parallel with the increase in lifetime in the long term, Turkey wil lhave to implement deeper structural reforms in the social security system to meet the needs of the population which is getting older, the report noted.

The report stressed that the reforms will increase the contributions of the systems to the increase in savings and growth.

The unemployment insurance can fortify the social security sector, the report said.

The report noted that other steps should be taken to watch the financial effects of the unemployment insurance and to establish a balance between the protection of the workers and prevention of encouraging people not to work.

The long-term financial results of the unemployment insurance are not certain, the report said, adding that the system will have to be carefully followed.

The report stated that the infrastructural reform is one of the cornerstones of Turkey's future growth and financial stability and that the reforms in electricity sector should be accelerated.

The current agriculture encouragement policies prevent growth, the report said.

The report noted that long-term reforms are needed to help the farmers adapt to the new atmosphere.

The report emphasized that a stong banking sector will support stability and growth.

Efforts are underway to strengthen the financial sector in Turkey, the report said.

The report noted that the World Bank expects the Banking Regulation and Audit Board to be away from political interventions.

The next step following the development of a new frame for the banking sector, is the full implementation of this new regulation, the report said, adding that they will follow the banks getting adjusted to the new standards.

The new incentive frame will lead to pressure for a change in the banking sector and will probably cause important bank marriages or separations, the report said.

The report noted that in the end, a stronger and flexible banking sector which will be open to competition, will occur.

But, the efficient control of the concerned authorities are needed in the transition period, the report stated.

The report pointed out that the banks can resist to this new formation and that to this end, the concerned authorities should work in close cooperation with the leaders of the banking sector to provide a smooth transition.

The report said that making reforms in public banking sector is important for the increase of power and efficiency of the system as a whole.

The report also included medium and long term estimations, stressing that medium term projections showed that Turkey needed a financial adjustment period to decrease its inflation target and realize its growth targets.

Recounting that the disinflation programme of Turkey backed by IMF and the World Bank aims at decreasing the inflation target to single digit figures, the report noted that resolved measures should continue to be taken to solve structural reforms in the public expenditure administation, social security, state economic enterprises, regulatory environment and subsidy programmes and privatization.

Covering some scenarios that can happen in the Turkish economy, the report said that ''speedy and qualified fiscal measures will be enough to reduce the public sector borrowing requirement to fix the public borrowings. Private sector will welcome comphensive reforms and foreign credit respect of Turkey will improve. Income per capita in U.S. dollars in 2003 will be 18 folds of the income in 1999. But if the reforms are left incomplete, this will cause serious risks regarding the repetition of possible financial crisis in the near future. Turkey's credit respect will decrease and the inflation will increase. If the government faces stagnation, its ability of financing the social priorities and development needs will be limited.''

The report stressed that suggestions aiming at realizing the sustainable growth in medium and long run, constituted an agenda composed of six articles for the government.

''Firstly a non-interest budget surplus of at least 40 percent of the GNP should be provided to support the growth and macroeconomic stability between years of 2000-2003. This will lead to a stable macro economic atmosphere.

Public expenditures and public institutions should be examined in a comprehensive way to protect the investments of the public sector in the field of human resources. Policies and institutional reforms should be pursued to this end.

Priority should be given to institutional reforms.

International practices, energy and communication services should be liberalized in parellel with the norms of the EU.

Subsidy programmes should be modernized by completion of the existing agricultural reform and the role of the state in production and marketting has to be ended. Additional measures have to be taken to solve the basic structural problems in the fields of irrigation and forestry. Besides state institutions should be re-constructed. The reform in the financial sector should continue to increase the productivity in the financial sector and to support the stability. The new legal frame has to be strengthened regarding the inspection of banks. The adjustment of the private banks to the new legal rules should be inspected and the reform started for the public banks should be completed.''

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