Caution for Turkish economic recovery
Economic reforms in Turkey are well underway according to analysts and government sources, but they warn that unless the IMF program is followed, Turkey may run the risk of an economic nosedive. A number of positive steps have been suggested on the economic reform front, but analysts report more steps need to be made on the restructuring issue. A Cabinet meeting was held in March to discuss restructuring plans but sources revealed there was still widespread resistance on the issue. Experts did report that a number of personnel cuts were made in the public sector as part of the reform package. The cuts, market watchers explain were a requirement for IMF approval of the first review which Turkey passed with flying colors. The lastest government plan as part of the IMF package is encouraging state personnel who have worked at least 30 years and/or those who are 55 to take early retirement. This plan, analysts say will relieve additional burdens on the economy. Govt. under pressure to boost recovery Analysts report that the Turkish government has been under pressure lately from business and industry circles to boost a recovery in economic activity in one of two possible ways. The first, by manipulating the floating exchange rate; the second in the form of a tax cut. Either way, experts point out these moves would derail the government from its IMF-backed program whose goal is to cut annual inflation in half to 35% by the end of 2002. Meanwhile, sources indicate the World Bank has plans to provide Turkey with an additional $1.5 billion in credit. About $500 million would be released in the second half of 2002 with the remainder released in 2003, analysts explained. Ecevit urges rapid growth Turkey doesn't have time to waste if one takes the vantage point of Turkish Prime Minister Bülent Ecevit. Reports reveal that Ecevit commented growth must forge ahead without allowing inflation to interfere. Experts are concerned though, that rapid growth would also encourage inflation sooner rather than later. Economy Minister Kemal Derviş has expressed skepticism over any deviation from reform as planned. Market watchers say Derviş has urged the government to adhere to the program, warning them that the IMF is monitoring Turkey's every move. Since Turkey is the IMF's largest beneficiary with loan deals in the area of about $31 billion in the last two years, it would seem that heeding the advice of Kemal Derviş is the most logical path.