Turkish parliament makes central bank responsible for monetary policy

Published April 25th, 2001 - 02:00 GMT

The Turkish parliament has given the central bank sole competence in setting monetary policy, the Anatolia news agency reported Wednesday, April 25, as the country struggles to recover from crisis and flotation of the lira. 


In a vote overnight, lawmakers approved a major law reforming the functions of the central bank, increasing independence of the bank and making it the ultimate authority in monetary policy, the agency said. 


The last time Turkey changed the legal status of the central bank was in 1971. 


Under the new law, the bank is independent but must report to parliament on a six-month basis on its activities, which are to conform with European standards, Anatolia reported. 


The central bank law was one of several priority measures outlined to tackle economic turmoil, which forced the government to float the Turkish lira in February, sending the currency plunging against the dollar. 


Since then the lira has lost more than 40 percent of its value against the dollar. 


The country had been rocked by another financial crisis, and threat of devaluation, at the end of last year. Analysts and international organizations say that weaknesses in the banking system, and corruption, are two of the central problems in the Turkish economy. 


Flotation of the currency disrupted a three-year anti-inflation program backed by the International Monetary Fund (IMF), and forced the revision of macro-economic targets. 


Legislative reforms are central to an ambitious new economic program announced two weeks ago by Economy Minister Kemal Dervis to put the country back on track and to secure $10 billion to $12 billion in foreign aid. 


The Dervis plan aims to reduce public spending, restructure the banking sector and speed up privatizations. 


On Tuesday the parliament adopted a law introducing new regulations governing the state expropriation of private property. 


Under the legislation, the state is able to expropriate property only if it has sufficient funds or is able to offer another property in exchange. 


Dervis was to fly to Washington on Wednesday to attend the spring meeting of the IMF and the World Bank for talks on securing financial aid to the crisis-hit economy, Anatolia reported. 


During the Thursday-Monday meeting, Dervis will hold talks with international financiers and economy ministers of Group of Seven leading industrial nations on Turkey's new economic program, the report said. 


After the IMF-World Bank meetings, Dervis will make a stopover in Germany to meet bankers before returning home, it added. — (AFP, Ankara) 


© Agence France Presse 2001

© 2001 Mena Report (www.menareport.com)

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