Turkey announced plans to rescue its crisis-racked economy on Saturday, urging disgruntled citizens to accept sacrifices and saying it hoped to agree US$10-12 billion in foreign support next week.
“We all should tighten our belts … Do not expect me to produce policies to save us just for today. We cannot dynamite our future in order to save today,” said economy chief Kemal Dervis.
Dervis presented his long-awaited economic rescue program as tens of thousands demonstrated throughout the country over the soaring prices, unemployment and hardship that have befallen Turkey since a financial crisis broke in February.
The program is aimed at calming markets and winning new foreign loans.
Dervis said the country’s economy would shrink by three percent this year but could record growth of 5 percent in 2002. Year-end 2001 consumer inflation would reach 52.5 percent, compared to 37.5 percent in March, but would fall next year.
Some 40,000 trade unionists marched through the commercial capital, Istanbul, shouting slogans denouncing Prime Minister Bulent Ecevit and the International Monetary Fund (IMF), blamed by many for the country’s plight.
“IMF equals unemployment and hunger” and “IMF go home!” protesters chanted. Police in normal uniform rather than riot gear lined the side of the route. The protest dispersed earlier than had been expected and without any of the trouble some had feared after Wednesday, when a demonstration by some 50,000 small businessmen degenerated into violence.
In the capital, Ankara, trade unions bowed to a city ban on demonstrations after police said those who clashed with the state would “definitely be hurt”. There were no reports of trouble in Ankara or other cities where protests occurred.
Dervis insisted IMF-backed loans were essential for the country to overcome mounting debt and reform its ailing banking system. He said he hoped international bodies would extend some US$10-12 billion.
“I believe we will establish the basis for foreign loans … next week,” he told a news conference. “I am very hopeful. I do not see any major difficulties.”
Dervis is seeking loans primarily from Group of Seven industrial countries and the World Bank.
Dervis, clearly with an eye on the protests taking place as he spoke, said the government would act to limit hardship.
“Our priority target is to prevent (further) unemployment,” he said. “The social dimension is important.”
Turning to the country’s bloated civil service apparatus, he said the number of government employees would be frozen and staff spending at state firms would fall.
A draft law to overhaul the country’s crisis-ridden banking sector — for many foreign investors a litmus test of Turkey’s will to reform — would be brought before parliament soon.
Instability in the banking sector lay at the center of crises in November and then again in February that effectively scuppered an IMF-backed program.
Three large state owned banks are hamstrung by billions of dollars in “duty losses” run up by issuing subsidized loans.
Many of the almost 80 private banks, which flourished during years of near three-digit inflation, are experiencing troubles and 13 have been taken into administration.
Dervis said he would push “surviving banks” to increase capital and step up a system of monitoring.
Dervis, a senior Turkish World Banker drafted in from Washington after the crisis swept the country, pointedly said he needed full support from parliament for his program. IMF officials, seeking clear assurances that any loans would be used promptly for key reforms, have made no explicit assurances of additional finance. The World Bank has spoken of some US$5 billion already agreed with Turkey in the last year. The IMF has hinted it could bring forward payment of at least some of the US$6.25 billion earmarked under a now defunct anti-inflation program as a standby to protect the lira.