Anadolu Agency: News in English, 01-11-29

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

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

ANADOLU AGENCY

NEWS

29 NOVEMBER 2001 Thursday

-TURKEY-PRESS SCAN

These are some of the major headlines and their brief stories in Turkey's press on November 29, 2001. The Anadolu Agency does not verify these stories and does not vouch for their accuracy.

HURRIYET (LIBERAL)

National Defense Minister Sabahattin Cakmakoglu made a surprize statement related with Iraq yesterday: ''Some new conditions can bring into the agenda new evaluations.'' Cakmakoglu, who made this statement before the visit of U.S. Secretary of State Colin Powell to Turkey scheduled for December 4-5, was perceived as Powell is coming to Turkey with Iraq dossier. U.S. President George Bush charged former Central Intelligence Agency (CIA) Chief Woolsey to search the links of Saddam Hussein with the September 11th terrorist attacks. Woolsey proposes to topple Saddam with the support of Turkey.

ATHENS: ''EU ARMY MAY FIGHT AGAINST TURKEY IF NECESSARY''

Greece officially announced that it would veto the assurance that Belgian Prime Minister Guy Verhofstadt gave to Ankara that ''EU army would not intervene in Cyprus and Aegean isues.'' That is, Greece wants the European army to fight against Turkey together with itself in a crisis which may occur in Cyprus or the Aegean.

MILLIYET (LIBERAL)

Turkey has taken all the measures against possible migration in case of U.S. operation against Iraq. Ankara is uneasy about war scenarios. As the discussions that the United States will strike on Irap and topple Saddam following its operation against Afghanistan continue, Turkey does not ignore this possibility. There is activity in Turkey's border with Iraq under the control of Second Army. The commanders have confirmed that all measures have been taken against a refugee inflow.

DGM LAW DOES NOT SUIT SEZER

President Ahmet Necdet Sezer partially vetoed the law which excluded gang crimes from the responsibility of the State Security Courts (DGMs). Sezer said that the law would weaken the fight against corruption. If Sezer had not vetoed the law, the cases regarding banks, corruption in state tenders would be heard by normal courts.

SABAH (LIBERAL)

International Monetary Fund (IMF) Executive Board approved a loan tranche of almost 3.1 billion U.S. dollars for Turkey. IMF said in a statement that the Executive Board of the IMF completed the tenth review of Turkey's economic program supported by a three-year stand-by arrangement. The Board's decision will enable Turkey to draw about 3 billion U.S. dollars immediately from the IMF.

CILLER: ''TURKEY WILL GIVE UP NEITHER CYPRUS NOR THE EU''

True Path Party (DYP) leader Tansu Ciller said in the group meeting of her party that Turkey would give up neither Cyprus nor the European Union (EU) for its future. Ciller critized Foreign Minister Ismail Cem who said they were ready to pay the price on Cyprus question.

CUMHURIYET (LEFT)

Professor Erdal Inonu said that some progress was needed in politics and that he would not work in any new political formation. Inonu's statement led to repercussions. Former Socialist People's Party (SHP) leader Murat Karayalcin said that Inonu's statement did not mean that the need for that political movement was removed. Tarhan Erdem said that the need for a new leftist party had not ended but that an attempt was over.

DERVIS: ''I COULD NOT SEE THE FUTURE''

The parliament rejected to take onto agenda the censure motion submitted by Felicity Party (SP) deputies against State Minister Kemal Dervis. Speaking at the session, Dervis said, ''I was very optimistic when I came to Turkey. I could not see the secret debts. It would have been better if I had not made the statements which would have a political meaning.'' Dervis said that Turkey, which was to be saved from the economic crisis, was no more regarded at the same place with Argentina.

RADIKAL (LEFT)

The unexpected visit paid by Belgian Prime Minister Guy Verhofstadt could not solve the problems for removing the barriers in front of Turkey and the European Union (EU), particularly European Security and Defense Policy (ESDP). Prime Minister Bulent Ecevit and Verhofstadt could not reach a conclusion in the meeting. Verhofstadt returned to Belgium with disappointment.

SALE OF BAYINDIRBANK

The Bayindirbank which was under the umbrella of the Savings Deposits Insurance Fund (SDIF) was put to sale. Those who are interested in the bank will submit bids till December 25, 2001. The announcement was issued in the Official Gazette on Wednesday. The applications should be made to SDIF till December 25, 2001.

TURKIYE (RIGHT)

Twelve giant men who defeated Ukraine again pleased Turkish nation. The national basketball team which had beaten Bulgaria and Switzerland in its first two matches also defeated Ukraine 80-67 and won its third victory.

IT ALSO HITS STOCK EXCHANGE: -5 PERCENT

The statement of National Defense Minister Sabahattin Cakmakoglu regarding Iraq upon the expectations that the United States could also launch an operation against Iraq caused uneasiness. The Istanbul Stock Exchange (IMKB) decreased by 5.06 percent to 11.129 points.

ZAMAN (CONSERVATIVE)

Istanbul Heavy Criminal Court acquitted former owner of Egebank Yahya Murat Demirel in the case filed for the illegal credits given to Demirel's companies by Halk Bankasi. The indictment said that Halk Bankasi had given illegal credit of 129 million U.S. dollars to some companies of Demirel.

BBP: ''CYPRUS CAN'T BE MADE MATTER OF BARGAINING''

Grand Unity Party (BBP) leader Muhsin Yazicioglu said that Cyprus could not be made a matter of bargaining as for European Union (EU) membership. Holding a press conference at the BBP Headquarters in Ankara, Yazicioglu some circles was seeing Cyprus as a burden for Turkey and was in favour of the policy 'give and save yourself.' Yazicioglu said, ''Cyprus is not a burden on Turkey. It is a strategic and indispensable cause. It is a territory where Anatolian blood was shed. We never make concession from this territory and nobody can dare to do this.''

-EMERGENCY RULE EXTENDED FOR 4 MONTHS

ANKARA- Emergency rule has been extended in four provinces for four months.

The Parliament decision which was issued on Thursday in the Official Gazette, said that the emergency rule had been extended in Diyarbakir, Hakkari, Sirnak and Tunceli provinces for another four months as of November 30,2001.

-IMF FIRST DEPUTY MANAGING DIRECTOR SUPPORTS TURKEY'S ECONOMIC REFORMS

WASHINGTON D.C- Anne Krueger, International Monetary Fund (IMF) First Deputy Managing Director and Acting Chairwoman, said on Wednesday that they supported Turkey's economic reforms and efforts, and added that continuation of economic reforms was of critical importance.

Krueger made a statement after IMF Executive Board released a loan tranche of almost 3 billion U.S. dollars for Turkey.

Anne Krueger said, ''executive directors commended the Turkish authorities on their continued strong implementation of a challenging economic reform program. The fiscal position has greatly improved and an ambitious legislative agenda has established central bank independence, enhanced transparency in economic policy making, and laid the basis for privatization of large state enterprises. In addition, important progress has been achieved in dealing with the problems of the banking sector.''

Krueger continued, ''the results of this policy effort had begun to appear in August, when financial markets stabilized and the economy seemed to be bottoming out, but have been set back by the events of September 11. The authorities have appropriately recognized that the impact of the events on the Turkish economy calls for an even stronger policy response, including maintaining a high public sector primary surplus, and a renewed focus on banking sector reforms, public resource management, and private sector development. Directors agreed that an appropriately strong response would warrant additional support from the international community.''

''Turkey's fiscal policy performance so far has been strong, and the closing of extra-budgetary funds and the new public procurement law submitted to parliament will help to improve fiscal transparency. It is critical that the authorities continue these efforts, and in particular reach the targeted public sector primary surplus of 6.5 percent of GNP in 2002, which will help ensure that the government debt position remains sustainable. Looking ahead, Directors saw a need for further reform of agricultural subsidies, retrenchment of public sector employment, and public sector wage restraint to underpin lasting fiscal adjustment over the medium term. They welcomed in particular the government's keen attention to protecting spending on social services, education, and health services,'' Krueger noted.

Krueger went on saying, ''as current conditions are not conducive to the successful introduction of formal inflation targeting, the Fund agrees that a delay until 2002 is warranted. The authorities should use this additional time to extend the necessary technical work, further strengthen the fiscal position, bring down inflation, and resolve the remaining problems in the banking system, so that a successful launch of inflation targeting can take place at an early date. In the meantime, the program will continue to be anchored by base money, with firm implementation of the program providing a good basis for a reduction in interest rates.''

''The authorities have made considerable progress in their ambitious structural reform agenda, including in bank restructuring. The banking supervision agency is making continued efforts to improve the regulatory environment, enforce regulations, and deal with problem banks, and the operations of state banks are being restructured rapidly under greatly improved management. Given the weak economic environment, the supervision agency will need to remain vigilant and put appropriate measures in place, if needed. Directors also looked forward to greater progress in privatization, and to more determined efforts to improve the business climate,'' Krueger added.

Together with 3 billion U.S. dollars released today, almost 15 billion U.S. dollars of 19 billion U.S. dollars allocated for Turkey by IMF since December 1999 has been extended to Turkey.

-GAP REGION EXPORTS AGRICULTURAL PRODUCTS WORTH OF 122 MILLION 620 THOUSAND U.S. DOLLARS TO NEIGHBOR COUNTRIES

GAZIANTEP - Southeastern Anatolia region exported agricultural products worth of 122 million 620 thousand U.S. dollars to neighbor countries in the first ten months of this year.

The export was 102 million 386 thousand U.S. dollars to the neighbor countries in tha same period last year.

Southeastern Anatolia Exporters Union said that region exportation to Syria, Iraq, Iran, Nakhcevan-Azerbaijan, Georgia, Greece, Bulgaria, and Turkish Republic of Northern Cyprus (TRNC) increased by 19.7 percent when compared to the same period of last year.

Cotton thread, synthetic and acrylic thread, machine-made carpet, knitted textile, sugar cubes, granulated sugar, flour, biscuits, cake, chocolate, candy and synthetic textile were the main export products.

-CONSTITUTIONAL COURT TO DEBATE ANNULMENT OF LAW ON PRIVATIZATION OF VAKIFBANK

ANKARA - Constitutional Court will debate annulment of the law on state banks regarding the merits of the case next week.

The Constitutional Court decided to debate the application of the banned Virtue Party (FP) for the annulment of the whole of the law on privatization of Turkiye Vakiflar Bankasi on December 5, 2001. The banned FP had applied to the court on January 19, 2001.

The court will also debate the request for stopping the implementation of the law.

The law which enabled the sale of A and B group shares of Turkiye Vakiflar Bankasi was issued in the Official Gazette on November 22, 2000.

The law enabled the sale of B group shares of the bank by public offering while authorized the Council of Ministers to set the methods related with the sale of the group A shares.

The law also foresaw that sale of group A shares should be made following the sale of group B shares and authorized the Council of Ministers to set the methods for the sale of group A shares.

In its application, banned FP said that Turkiye Vakiflar Bankasi was in fact a private bank and that it was subject to special legal provisions. The FP noted that the Treasury did not have any share in the bank.

Claiming that appointment of the director general of the bank directly by the prime minister did not coincide with the private structure of the bank, the banned FP noted that whole of the law was against the Constitution and requested its annulment.

Also, the Constitutional Court will debate the case opened by the main opposition True Path Party (DYP) for the annulment of temporary fifth article and third article of the law which amended some laws and decrees in the force of law.

The temporary fifth article of the law limits the responsibility of the executive and control board members charged with the restructuring of state banks.

The third article of the law amends second article of the annex of the Turkiye Vakiflar Bankasi Law. This article authorizes the Council of Ministers to set the methods for the sale of the group A and B shares of the bank.

-SUPREME MILITARY COUNCIL TO CONVENE ON FRIDAY

ANKARA - The Supreme Military Court will hold its second regular meeting of 2001 on Friday.

The council will convene at the General Staff Headquarters at 9.45 a.m. under the chairmanship of Prime Minister Bulent Ecevit.

Land Forces commander Hilmi Ozkok, Air Forces Commander Cumhur Asparuk, Naval Forces Commander Bulent Alpkaya, Gendarmerie General Commander Aytac Yalman, First Army Commander Cetin Dogan, and many other high-level military officials will attend the meeting.

The members of the council will visit Anitkabir, the Mausoleum of Great Leader Ataturk, at noon.

The second regular meeting of Supreme Military Council for 2001 will end the same day.

Besides appointments and promotions, the planned activities of the Turkish Armed Forces will be evaluated at the meeting.

-INDUSTRIAL PRODUCTION DECREASES BY 10.1 PERCENT IN THIRD QUARTER OF YEAR

ANKARA- Industrial production decreased by 10.1 percent in the third quarter of the year when compared with the same period last year.

According to the figures of State Statistics Institute (DIE), production in mining sector decreased by 8.8 percent between July and September 2001 while the decrease in manufacturing industry became 11.1 percent.

The production in electricity, gas and water fell by 1.8 percent.

The nine-month decrease in industrial production was 7.8 percent.

In the mentioned period, production in mining sector fell by 5 percent while decrease in manufacturing sector was 8.6 percent in the first nine months of this year.

The production in electricity, gas and water decreased by 2.1 percent in the first nine months.

-BOTAS GENERAL DIRECTOR SAYS EQUIPMENT AND CONSTRUCTION TENDERS TO BE

ANNOUNCED FOR BAKU-TBILISI-CEYHAN PIPELINE PROJECT IN JANUARY

ANKARA- Gokhan Bildaci, the General Director of Pipeline Transportation Inc (BOTAS), said on Thursday that the equipment and construction tenders for the Baku-Tbilisi-Ceyhan pipeline project would be announced in January.

Bildaci told A.A correspondent that detailed engineering works would be concluded on June 19, 2002 and the foundation would be laid on June 24, 2002.

The unit price of the project was 18 U.S. dollars, Bildaci said.

Bildaci noted that they were very careful about works on the environmental effects of the projects.

-DERVIS SAYS TURKEY WILL BE LEADING COUNTRY IN FUTURE

IZMIR- State Minister Kemal Dervis said on Thursday that if Turkey worked in coordination with self-confidence altogether, it would be the leading country among the emerging markets and industrialized world in the future.

In a statement to the magazine of the Izmir Ataturk Organized Industry Zone Industrialists' and Businessmen's Association (ASAD), Dervis made evaluations about the economic crisis and Turkey's future.

Dervis said that the basic aim of the ongoing structural reforms was to increase the economy's efficiency, reaching a more rapid and sustainable growth performance through existing sources.

Noting that stability in the economy would be settled as a result of successful implementation of the program and an atmosphere of sustainable growth would be prepared in long term, Dervis said, ''in a Turkey where there is not inflation, prosperity level of all sections will increase, employment and productivity will rise and there will be more fair distribution of income. We should now put a model based on production into practice instead of hopelessness by giving up the system based on unearned income. If we altogether work in coordination with self-confidence, Turkey will be the leading country among the emerging markets and industrialized world.''

''The basic target of the stability program which was put into practice in 2000 was to beat the inflation which is the basic indicator of instability and main reason for social injustice. However, structural reforms became late, oil prices exceeded the expectations, euro excessively gained in value like U.S. dollar and current deficit increased. Later, interest rates increased and the banking sector faced crisis,'' he said.

''Besides, terrorist attacks of September 11 in the United States created uncertainty also in Turkey. However, we are determined to overcome negativities created in the Turkish economy due to these attacks,'' he said.

''The 2002 program and budget have been formed on a disciplined finance policy. More important, we have received the message that also the international finance organizations will continue their support which is necessary to the program,'' Dervis added.

-MERCEDES-BENZ TURK A.S. APPEALS COURT DECISION ORDERING RECALL OF ITS BUSES

KONYA - Mercedes Benz Türk A.S. appealed the court verdict ordering ''recall of 0 403 Mercedes passenger buses''.

The case which had been filed against Mercedes Benz Turk A.S. company and its managers after a traffic accident in which 49 people in a 0 403 Mercedes passenger bus were burnt to death near Karapinar township of Konya 4 years ago, was finalized on Monday, November 26.

The Karapinar Basic Criminal Court decided that the passenger buses' fuel tanks were so defective that it had caused the fire in the bus, and ruled to ask the company to recall all 0 403 Mercedes passenger buses produced in 1995, 1996, 1997 and 1998.

The court decision asks the company to correct the defects in the fuel tanks and hand over the buses to their owners.

Karapinar Basic Criminal Court authorities told the A.A correspondent on Thursday that lawyers of the defendant Mercedes Benz Turk A.S. had submitted an appeal petition to the court and asked to court to annul the verdict.

-IMF OFFICIAL SAYS THEY EXPECT GROWTH IN TURKISH ECONOMY NEXT YEAR

WASHINGTON D.C.- A high-level International Monetary Fund (IMF) official said late on Wednesday that they expected growth in Turkish economy in the following year.

Responding to questions at a teleconference, the official noted that additional loans could be extended to Turkey by some countries and the World Bank except the Stand-By agreement foreseen by the IMF.

The IMF official stressed below mentioned points in the teleconference:

-Turkish economy is expected to grow in the following year.

-Additional loans from some countries and World Bank can come to Turkey except the Stand-By deal with the IMF. IMF supports it.

-Turkey will not undertake a debt repayment burden next year if it reaches the non-interest bugdetary surplus target which is calculated as 6.5 percent of the Gross National Product (GNP) and if the real interest rates are taken under control.

-The total amount of loan that the IMF has allocated for Turkey is the highest amount that the IMF has extended to a country in its history in regard to country quotas.

-Additional financing of 10 billion U.S. dollars foreseen within the framework of the Stand-By will come to Turkey as an amount except the loans that Turkey will receive under the current program.

-IMF has full belief that the inflation will fall.

-Turkey still has 4 billion U.S. dollars to receive from IMF under the current program.

-They can prefer to include the 11th review in the new Stand-By deal. But, they have not given the final decision.

-Since Turkey has had a good performance, the IMF accepted to extend additional support to Turkey within the framework of the support extended to world economy following the September 11th terrorist attacks in the United States.

-The new Stand-By deal is expected to enter into force in January.

-The new Stand-By has to give importance to structural reforms. For example, privatization, public sector reform, restructuring of state banks and tax administration reform are needed.

-The government's extending full support to the program after some problems related with the government's support had occured in July had a positive impact on the markets. This support and financial policies should be continued.

-IMF delegation will go to Ankara for the new Stand-By deal next week. The delegation will stay in Turkey for 15 days.

-LETTER OF INTENT SAYS ALL PERFORMANCE CRITERIA MET

ANKARA - The letter of intent presented by Turkey to the International Monetary Fund (IMF) for the 10th review said that all performance criteria were met.

The letter of intent which was signed by the State Minister Kemal Dervis and Central Bank Governor Sureyya Serdengecti was put on the web-page of the Treasury Undersecretariat.

Drawing the attention that the tragic events of September 11 disrupted the positive momentum in the economy and worsened the outlook, the letter of intent said that the firm implementation of economic program continued.

The letter said that all performance criteria relevant for completion of the tenth review had been met and listed those reforms.

In response to the worsened outlook following the September 11 events, they were now formulating a strengthened program for 2002–04, the letter of intent noted.

The letter of intent continued, ''in this context, we are seeking further financial support from the international community. This medium-term program will build on the progress we have already made in macroeconomic and financial stabilization, while taking decisive steps to complete banking reform, revitalize privatization and private sector development more generally, and improve governance and efficiency in the public sector. We expect to finalize this program and present it to the Fund before the end of this year.''

''Meanwhile, we are already taking measures to alleviate the impact of the September 11 events on Turkey. In particular, we are introducing urgent initiatives to allow us to meet the ambitious fiscal targets for 2002, and to support viable real sector enterprises facing temporary difficulties as a result of the current situation. We will continue to communicate these and other policy measures to the Turkish people and domestic and international investors, to broaden support for our economic program,'' the letter stated.

The letter noted, ''on this basis, we request completion of the tenth review under the stand-by arrangement. We also request modifications of the program's monetary performance criteria and indicative targets for end- 2001. In particular, to anchor monetary policy, we propose converting the end-2001 indicative ceiling on base money into a performance criterion.''

Requesting modification of the end-December 2001 performance criterion on the primary expenditure of the central government, the letter of intent said, ''we believe that the policies and measures described in this letter are adequate to achieve the objectives of the program, but we stand ready to take additional measures if necessary to keep the program on track, in close consultation with the Fund.''

The letter of intent pointed out that any measures to support the economic recovery will be market based, transparent, and consistent with budget targets.

Under the strengthened economic program adopted in May, Turkey had made major strides in stabilization and reform, the letter of intent said.

Despite occasional domestic disagreements, not surprising given the far- reaching nature of the reforms, those efforts started to bear fruit toward the end of the summer, the letter of intent noted.

The letter of intent stated that the stabilization and reform process had been challenging and far reaching.

''The tragic events of September 11 disrupted the positive momentum in the economy and worsened the outlook. In the immediate aftermath, financial markets reacted strongly: Interest rates on governments securities rose by 10–15 percentage points, stock prices fell sharply, and the Turkish lira depreciated substantially. While financial indicators have since recovered because of the expectations of further financial support from the international community, the adverse effects on the economy more generally are only beginning to show. Tourism receipts are taking a hit, and exports, which had performed well in the first eight months, will be affected, delaying the start of economic recovery and weakening the external current account. Capital inflows are diminishing, as Turkey's access to the international capital markets has become more limited and investors' appetite for Turkish assets has weakened,'' the letter said.

The letter went on saying, ''nevertheless, we have continued the firm implementation of our economic program. Since the completion of the ninth review under the stand-by arrangement, we have made further progress in key areas, notably bank restructuring, fiscal adjustment, and monetary policy. All performance criteria relevant for completion of the tenth review have been met.''

''In response to the worsened outlook following the September 11 events, we are now formulating a strengthened program for 2002–04, and we are seeking further financial support from the international community. This medium- term program will build on the progress we have already made in macroeconomic and financial stabilization, while taking decisive steps to complete banking reform, revitalize privatization and private sector development more generally, and improve governance and efficiency in the public sector. We expect to finalize this program and present it to the Fund before the end of this year,'' the letter of intent noted.

In the letter of intent, completion of the tenth review under the stand-by arrangement was requested.

By early September, inflation had declined, the external current account had moved into surplus, and interest rates on government securities were on a downward trend, the letter said.

The letter of intent pointed out that a steeper-than-expected decline in the second quarter had already suggested a need to revise downward our earlier projection of real GNP growth of –5.5 percent in 2001.

''The September 11 shock has further delayed the recovery, and we now estimate real GNP to decline by 8.5 percent this year. While we continue to expect a recovery in 2002, we have lowered our growth projection by one percentage point, to 4 percent,'' the letter of intent noted.

The letter of intent said that as regards inflation, the further currency depreciation suggested that Turkey's end-year CPI inflation projection needed to be increased from 58 to 65 percent.

For next year, based on the advice of the Monetary Policy Council, the government and the CBT had set an inflation target of 35 percent, the letter of intent stated.

The letter of intent said that the economic slowdown and the depreciation of the Turkish lira had led to a marked turnaround in the external current account in 2001.

''We are well aware that in the present circumstances our projections are subject to considerable uncertainty, and we stand ready to adjust our policies should changes in the macroeconomic framework warrant this,'' the letter noted.

The letter said that given the depth of the recession, extra attention had to be given to the supply side of the economy, while maintaining their strong fiscal stance.

In August, they established a high level private sector led committee to review and propose possible measures in this area, the letter stated.

The letter continued, ''any measures to support the economic recovery will be market based, transparent, and consistent with budget targets. Two types of initiatives have been identified to date. First, to help ensure that viable firms receive the credit necessary for their operation, we will facilitate private sector-led corporate debt restructuring, while refraining from using public funds for this purpose. Second, we have adopted two temporary and narrowly-targeted tax reductions (in the supplementary motor vehicle purchase tax and the VAT rate on consumer durables) to last only until end-2001, with the objective of reducing a large accumulation of stocks in the consumer durables sector. The VAT tax rates had of course been increased for the great majority of goods and services in June, and our fiscal policy targets will not allow any further temporary or other reductions in 2001 or 2002.''

''Our strong budget implementation and measures to increase demand for treasury bills introduced in late July have secured the prospects for a comfortable domestic debt rollover for the coming months. As a result, the rollover ratio required of the private sector for the remainder of 2001 has fallen appreciably. To ensure a smooth rollover, we will continue to closely coordinate the government's borrowing strategy with restructuring of the public banks. In line with the program's strategy for bank restructuring, the Treasury has serviced in cash the recapitalization bonds held by state and SDIF banks (intervened banks controlled by the Saving Deposit Insurance Fund) to allow these banks to reduce their short-term liabilities and to provide for any migration of deposits to private banks. During the latter half of 2001, this policy has facilitated a sharp reduction in public banks' short-term liabilities, as their deposit base has been stable. Looking ahead, we will ensure that any liquidity of public banks in excess of that required to meet deposit outflows will be utilized to reduce the Treasury's borrowing requirement from the private sector. We expect that the strong financial position of state banks and continued growth in their deposits should give considerable scope for state banks to participate in the rollover,'' the letter said.

The letter noted, ''we will take additional steps to further ease the rollover of government debt in 2002. The potential for participation of the state banks in the rollover as discussed above, together with additional external support to the budget, should limit the borrowing required from the private sector in 2002 to manageable levels. This will ease the rollover, and help to bring about a reduction in real interest rates. To further improve the prospects for a smooth rollover, we will take the following steps:

We will make every effort to lower the domestic borrowing requirement. To this end, we will issue Eurobonds to the extent demand from investors allows. We will also pursue privatization vigorously.

We will issue a broad range of instruments aimed at lengthening maturities of domestic debt in a manner that meets market demand. In this context, we will continue to issue fx-denominated and fx-indexed bonds, while keeping in mind the need to limit the government's foreign exchange exposure. We are also considering the issuance of floating rate notes (FRNs). To this end, we will take steps to improve the liquidity of the FRN market by encouraging the use of standard methods of price and yield calculations, and by ensuring that their interest rate risk is measured accurately for regulatory, collateral valuation, and other official purposes.

We will supplement the regular program of auctions with continued direct public offerings of government instruments, to widen the demand base beyond banks and to make it more stable. We will also intensify our dialogue with domestic investors to ensure that we have identified and met the demand of the widest range of investors.

We have further strengthened the Treasury's borrowing strategy by improving the flow of information from the banking system. To this end, we have established a special committee that meets weekly. It consists of representatives from the Treasury, the CBT, the Banking Regulation and Supervision Agency (BRSA), the SDIF, the Capital Markets Board, and the state banks. The improved exchange of information, including a weekly report circulated to the heads of the participating institutions, will assist the Treasury in the formulation of its borrowing strategy.''

(To be continued)

-LETTER OF INTENT SAYS TURKEY WILL AVOID SHARP INCREASES IN TAX RATES (2)

ANKARA- The letter of intent presented by Turkey to the International Monetary Fund (IMF) for the 10th review said that Turkey would avoid sharp increases in tax rates on the revenue side.

The letter of intent which was signed by the State Minister Kemal Dervis and Central Bank Governor Sureyya Serdengecti was put on the web-page of the Treasury Undersecretariat.

The letter of intent stressed that some tax rate increases had to be made, including the petroleum consumption tax and motor vehicle tax.

The letter said, ''for 2001 as a whole, we expect to meet our end-year public sector primary surplus target of 5.5 percent of GNP, but central government primary spending is likely to exceed its target.''

''For 2002, the program target for the primary surplus of the public sector remains 6.5 percent of GNP. Since we do not project a sharp rebound in public sector revenues and need to support some new programs, this requires a substantial effort on our part to identify measures,'' the letter of intent noted.

The letter of intent said, ''in the central government, we aim to increase the primary surplus to 5.6 percent of GNP in 2002. To achieve this target, we aim to collect 25.0 percent of GNP in primary revenue, and to spend 19.4 percent of GNP, excluding interest payments. On the revenue side, we will avoid sharp increases in tax rates. Some tax increases are, however, necessary, including further real increases in the petroleum consumption tax and the motor vehicle tax. As regards expenditures, we will strictly limit personnel costs, and keep civil service and public sector hiring to a minimum. We will also make major strides in limiting non-wage spending, including by rationalizing our investment program and reorienting our agricultural support system.''

''In the remainder of the public sector, we aim to achieve a primary surplus of 0.9 percent of GNP in 2002. We expect the primary positions of social security institutions and local governments to remain broadly in balance. For EBFs we expect a small deterioration to a primary deficit of 0.2 percent of GNP (to accommodate increased social spending). This deficit however will be offset by a small surplus in the unemployment insurance fund (the decline vis-à-vis 2001 reflects the beginning of benefit payments in March, and a cut in premium payments in support of job creation). Hence, we expect the targeted primary surplus in the remainder of the public sector to come from SEEs. To accomplish this, we are taking a large number of measures, split roughly evenly between expenditures and revenues. On the expenditure side, our focus is on controlling the wage bill, and restructuring operations. The revenue measures include removal of exemptions and increases in enterprise tariffs. In support of these measures, we have assigned Treasury auditors to monitor performance and implementation on a quarterly basis,'' the letter stated.

The letter said, ''while our fiscal policy stance is tight, we will nevertheless increase real spending in the social sector, protecting the most vulnerable segments of society.''

''We have decided to postpone the introduction of inflation targeting until next year, when we expect the conditions for a successful launch to be in place. We remain determined to make inflation targeting our nominal anchor as soon as conditions allow,'' the letter of intent pointed out.

The letter said, ''we will further improve the working of our flexible exchange rate system. We will continue to strictly limit discretionary intervention in the foreign exchange market, that is, CBT foreign exchange transactions outside pre-announced auctions. We are also taking additional institutional steps to improve the functioning of the foreign exchange market. To enhance the development of forward and futures exchange markets, we will encourage the introduction of a Turkish Interbank Offer Rate, which should serve as a basis for pricing these financial instruments. In addition, we will clarify the taxation and accounting procedures of the futures contracts. This further development of the futures market will allow exporters and importers to hedge against exchange rate uncertainty. Also, the Treasury and the Privatization Agency are taking measures to improve financial management in the state economic enterprises, to prevent their lumpy foreign exchange transactions from causing disruptions to the foreign exchange market.''

''We are pressing ahead with our strategy to strengthen the private banking system, so as to underpin a return to rapid medium-term growth,'' the letter noted.

The letter said, ''the BRSA has been closely monitoring compliance with the capital strengthening plans already in place for financially weak banks. It remains committed to promptly imposing the sanctions prescribed in the Banking Law on any bank that does not fully comply with its agreed plan. The BRSA will reassess agreed recapitalization plans for private banks based on end-September data, and, if needed, request banks to further strengthen existing plans. An assessment will also be made about the need to agree on recapitalization plans with additional banks.''

''In view of possible vulnerability to credit risk arising from loan portfolio deterioration, the BRSA will make every effort to further strengthen the implementation of the loan classification and provisioning regulation. The BRSA will further focus on asset quality in its supervision, and make sure banks have identified all nonperforming loans (NPLs). In cooperation with the private sector, we are examining various alternatives for dealing with banks' NPLs, including the establishment of an asset management company (AMC). We will finalize the strategy for dealing with NPLs by January 2002. Were the strategy to involve the establishment of an AMC, we would seek to eliminate as soon as possible any legal or other policy impediments for the creation of such an institution. The AMC would be financed without recourse to public resources. Given that the NPL problem is inextricably linked to weakening corporate sector performance, and that addressing the latter is critical for the economic recovery, we are committed to facilitating the process of corporate debt restructuring. To this end, we are preparing a draft Law on Restructuring of Debts to the Financial Sector. This Law envisages a market-based approach under which debt restructuring will proceed without the use of public funds and without supervisory forbearance. We will also address any legal impediments to corporate debt restructuring in a prompt and decisive manner. In this context, we will submit an amended bankruptcy law to parliament by January 2002.''

The letter said that rapid progress had been recorded in restructuring of SDIF banks.

''So far this year, we have raised US$2.8 billion in privatization receipts. In 2002, we expect to raise about US$1.5 billion,'' the letter noted.

The letter said, ''we are taking a number of steps to improve governance and attract FDI. A key step, the submission to parliament of a new Public Procurement Law consistent with international standards, was already mentioned above. Beyond this, to increase the transparency of economic policies, we will reinforce our efforts to improve the quality of public sector data. To this end, and to enhance public sector resource management more generally, we will present to parliament a Public Finance Management and Internal Control Law by mid-2002.''

The letter said, ''we intent to submit to parliament by January 15, 2002 a new draft Law on Foreign Direct Investment in line with the findings of the FIAS study, submit to parliament by end-December 2001 a draft law on work permits, complete by end-January 2002 draft legislation reducing the number of documents needed to obtain investment incentives, and raise by end- January 2002 the minimum amount in VAT rebates that can be made without submitting examination reports and posting financial bond guarantees.''

The letter of intent noted that close cooperation with the World Bank in structural and social issues continued, adding that the support of the World Bank was expected.

-KARAKOYUNLU SAYS ANADOLU AGENCY CONTINUES FULFILLING ITS MISSION SUCCESSFULLY

ISTANBUL- State Minister Yilmaz Karakoyunlu said on Thursday, ''today, the Anadolu Agency stands on its feet and continues fulfilling its mission successfully.''

Karakoyunlu attended the ''Local Media Year-End Evaluation Meeting'' which was organized by the Association of Turkish Journalists and Konrad Adenaur Foundation in Armada Hotel in Istanbul.

Speaking at the meeting, Karakoyunlu said that he was attending the meeting together with the general directors of the public sector's three giant organizations, Turkish Radio and Television, Anadolu Agency and Directorate General of Press and Information, in order to display the importance they attributed to the meeting.

''There were two important means of communication in Turkey before the founding of the Republic. One of them is the Anadolu Agency and the other one is the founding of the Directorate General of Press and Information. Today, the Anadolu Agency stands on its feet and continues fulfilling its mission successfully. The other one also stands on its feet as the Directorate General of Press and Information despite some manhandlings,'' Karakoyunlu said.

''The Turkish Radio and Television, the Anadolu Agency and the Directorate General of Press and Information are the giant organizations of this profession in the public sector. And their general directors are managing their organizations with a proficiency of management which we can be proud of. They are serving the Turkish nation,'' he said.

-FORIGN MINISTER CEM DUE TO BUCHAREST

ANKARA- Foreign Minister Ismail Cem will leave for Bucharest, Romania to attend the 2001 Year Ministers Council Meeting of the Organization for Security of Cooperation in Europe (OSCE).

The Foreign Ministry said on Thursday that a delegation headed by Cem would attend the OSCE meeting in Bucharest between December 3-4.

Noting that exchange of opinion would be made on regional issues related to the Balkans, Caucasus and Central Asia, it said that also opportunities of cooperation within framework of OSCE in fight against terrorism would be sought in the meeting.

A joint statement on fight against terrorism and an action plan were foreseen to be presented to the participating ministers' approval in the OSCE meeting, it said.

The Foreign Ministry said that Cem would meet with foreign ministers of some participating countries and high-level officials of some other regional organizations.

Meanwnhile, U.S. Secretary of State Colin Powell who will visit Ankara between December 4-5 is expected to attend the OSCE meeting.

-ETIBANK'S PICTURES AND ANTIQUES TO BE SOLD

ISTANBUL - Etibank's pictures, carpets and antiques will be sold in an auction that will be held on December 11-12.

Etibank's 431 pictures, 45 carpets most of which are Iranian, sumac and kilims, and nearly 100 antiques will be sold in this auction.

The auction will take place at the Eskidji Auction House's building in Dolapdere, Istanbul.

-COURT DECIDES TO RELEASE 3 SUSPECTS CHARGED WITH CORRUPTION IN ENERGY

ANKARA- The Ankara High Criminal Court no:4 decided on Thursday to release three suspects in the case in which 15 suspects are charged with ''bribery, corruption in energy tenders and misuse of authority''.

The court decided to release former Turkish Electricity Production and Transmission Corp (TEAS) Director General Muzaffer Selvi, former TEAS Deputy Director General Unal Peker and former TEAS Executive Board member Birsel Sonmez on 2 billion Turkish liras (TL) bail but it decided to ban these suspects from going abroad.

After this decision, all of the 15 suspects will be tried without arrest.

-SDIF ANNOUNCES RESULTS OF TRANSFER AUCTION FOR 4 DEPOSITS POOLS

ANKARA - The Savings Deposits Insurance Fund (SDIF) announced on Thursday the results of the bids submitted to the auction for transfer of deposits at its banks to other commercial banks.

SDIF said that it had chosen the highest and reasonable bids to the transfer auction for four deposits pools.

Within this scope, it would start talks with the bidding banks on transfer of those deposits to the banks as of November 30, 2001, SDIF said.

It said that it had received 10 bids to the 161 million 957 thousand 181 U.S. dollars of foreign currency deposit pool and the highest bid was 170 million 110 thousand U.S. dollars.

It said that it had received 4 bids to the 150 million 451 thousand 240 U.S. dollars of foreign currency deposit pool and the highest bid was 163 million 975 thousand U.S. dollars.

SDIF said it had received 5 bids to the 125 trillion 420 billion 206 million 241 thousand 393 Turkish liras (TL) of TL deposit pool and the highest bid was 132 trillion 216 billion 110 million TL.

It said that it had received 7 bids to the 70 trillion 896 billion 786 million 968 thousand 346 TL of TL deposit pool and the highest bid was 73 trillion 597 billion 550 million TL.

-PARLIAMENT ACCEPTS TO OPEN PARLIAMENTARY INVESTIGATION AGAINST

FORMER SETTLEMENT AND PUBLIC WORKS MINISTER KORAY AYDIN

ANKARA- Parliament accepted to open parliamentary investigation against former Settlement and Public Works Minister Koray Aydin. The motion was accepted by 231 votes in favor. There were 196 votes against the motion.

A total of 443 parliamentarians attended the voting, which has taken place secretly for the first time following an amendment to Article 100 of the Constitution. A total of 11 parliamentarians casted abstaining votes. Four of the votes were invalid and one was empty.

Deputy Parliament Speaker Ali Iliksoy, who announced the results of the commission, said the investigation commission will be comprised of 15 people. He said the Chairmanship Council will be assigned for two months.

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