Turkey is seeking an additional $10 billion to $12 billion in international aid to implement its economic reform package, Economy Minister Kemal Dervis said in Washington Tuesday, March 27.
"There is a need for additional net foreign financing," Dervis told reporters in Washington, where he was holding talks with officials from the United States and international financial institutions. "We think $10 to $12 billion of short-term foreign support is necessary," he said, adding that the funding would be needed quickly.
Turkey has faced a cash crunch and fears of political instability since abandoning a pegged exchange rate last month to float the lira, in breach of a three-year, IMF-backed anti-inflation plan in place since December 1999. Since then, the lira has lost around 30 percent against the dollar amid rising prices and prospects of extra budget expenditures.
Officials have said Turkey will need foreign financial aid to implement the reforms required to overhaul the battered economy, especially to cover the huge losses of three public banks.
Dervis, a former World Bank vice president appointed economy minister several weeks ago, left for Germany and the United States last week to drum up support for a financial aid plan backed by the International Monetary Fund (IMF).
The Fund approved a $3.7-billion credit package for Turkey in 1999, to which it added another $7.5 billion dollars last December. Turkey's request comes as the IMF is being pilloried in certain congressional and academic circles in Washington for its handling of financial crises in Asia in 1997 and Russia a year later for "bailouts."
But Dervis said he had "very good, very concrete" discussions with US Treasury Secretary Paul O'Neill, and was optimistic about getting enough support for the plan. "I think it truly is in the interest of Turkey's partners and the international community to provide modest financing" for the package, he said.
The Turkish official said he hoped the plan could be finalized by mid-April, to help the country's ailing economy recover later this year. A week ago, Ankara and the IMF agreed on the framework of a revised economic program.
Dervis acknowledged that the Turkish economy had been "very badly hit," and was now in a negative growth phase, but predicted a recovery later this year. "We are quite confident that there will be a turnaround in the summer ... and that interest rates will decline," he said.
He added that as in the case with currency devaluations in other emerging markets, he sees Turkey benefiting from a lower exchange rate to help exports and tourism. "There could well be a process of export- and tourism-led growth that will start in the summer," he said.
He noted that the measures include a plan to "radically" restructure Turkey's state banks, which have "been a source of destabilization and weakness in the Turkish economy for a long time." — (AFP, Washington)
by Rob Lever
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)