Turkish President Ahmet Necdet Sezer has rejected as unconstitutional a government decree for the privatization of three state banks — a sell-off required of Turkey under international loan agreements, officials said Tuesday.
The privatization of the troubled Ziraat, Emlak and Halk banks was one of the pledges Turkey made to the International Monetary Fund (IMF), the World Bank and Japan in return for several billion dollars in loans to reform its ailing economy.
Total losses by the three institutions since the beginning of the year are estimated at 25 billion.
Sezer said provisions in the decree envisaging tax exemption in the planned restructuring of the banks and in the subsequent sale of their shares violated a constitutional article prohibiting the regulation of tax issues via government decree, according to a statement by Prime Minister Bulent Ecevit's office.
It called the presidential rejection "an unexpected development" and added that Sezer had previously approved another decree regulating tax matters.
Ecevit told reporters later that the cabinet would convene this week "to discuss what changes could be made to clear the presidential obstacle and take the necessary measures."
The World Bank suspended in July the scheduled release of $750 million for banking sector reforms in Turkey after Ankara failed to meet a June 30 deadline for adopting the decree privatizing the three banks.
Tokyo has reportedly put on hold another loan of $750 million as well over the matter.
The World Bank has pledged credits totalling three billion dollars over three years to provide an additional boost to an ambitous Turkish program of economic reforms approved by the IMF in December in a three-year, four-billion-dollar stand-by deal.
Presidential rejection of the privatization decree follows a dispute between Sezer and Ecevit last month over the legal format of a government decree enabling the dismissal of public servants deemed to be linked to subversive Islamist and ethnic Kurdish movements.
Sezer, a former head of the constitutional court, twice declined to approve the decree on the grounds that under the constitution disciplinary sanctions should be regulated by a full-fledged law passed by parliament and not by government decree.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
