Tuesday March 27, 4:40 pm Eastern Time
Turkey Asks for More Money
By HARRY DUNPHY
Associated Press Writer
WASHINGTON (AP) -- Turkey needs $10 billion to $12 billion in new financing to recover from a financial crisis that has seen the country's currency, the lira, lose 30 percent of its value, Economy Minister Kemal Dervis said Tuesday.
The new money would be in addition to the $6.25 billion of loans provided under Turkey's current agreement with the International Monetary Fund, Dervis said after meetings here with officials from the IMF, the World Bank, and the Treasury.
The latest economic and financial turmoil has forced the Ankara government and the IMF to renegotiate the terms of the economic restructuring program signed in January 2000. Dervis, a former World Bank vice president, said he expected those talks would be completed by mid-April.
``We do believe something close to $10- to $12 billion of additional short-term immediate support is necessary, and that comes in addition of course to very significant fiscal efforts on the part of Turkey, including financing a major and radical cleanup in the banking area,'' Dervis said.
A number of measures to address weakness in Turkey state-owned banks will be key to restructuring plans, Dervis said.
``I would like to underline that measures relating to the state banks are quite crucial and radical,'' Dervis said. ``State banks have been a source of destabilization in the Turkish economy and weakness for the economy for a very long time because they were used for very short-term populist aims.''
The lira's fall last month has led to price hikes and widespread layoffs.
Last week, Turkey and the IMF reached a preliminary agreement on measures to shore up an economy the government has predicted would contract by 2 percent this year. Dervis said the IMF had agreed on the framework of a new economic program to tame inflation and regain market confidence.
Turkey is currently revising its anti-inflation program, backed by a total of $11 billion in loans from the IMF. The new program will include a restructuring of the ailing banking system and measures to tame public spending and speed up privatization.
Any new funding for Turkey would have to be approved by the IMF's board, where the United States, an important NATO ally of Turkey, has a prominent role as the institution's largest shareholder. But the Bush administration has not said how much new financing for Turkey it will support.
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