Turkey appoints top finance chief

ANKARA, Turkey (Reuters) -- Turkey has appointed a senior World Banker as a "super-minister" with wide-ranging powers to help recover the country's shattered economy.

Prime Minister Bulent Ecevit said World Bank Vice President Kemal Dervis had been taken on to oversee the treasury as well as the country's banking watchdog.

Dervis said Turkey would soon get back on track after a public argument between the country's prime minister Bulent Ecevit and its president Ahmet Necdet Sezer sent the lira crashing by more than a third.

The disagreement two weeks ago was sparked by accusations over the speed of anti-corruption measures.

In another move Ecevit promoted Central Bank Deputy Governor Sureyya Serdengecti to governor after the resignation of the previous boss Gazi Ercel.

Ecevit will be hoping the combination of Dervis, a Turkish economist of international stature, and Serdengecti, who has close relations with the banking community, will be a winning team to revamp an IMF disinflation programme in tatters.

"Mr. Dervis has extensive personal knowledge and experience of economic issues and international economic relations," Ecevit said.

"I believe he will be very successful in his work in our home."

Serdengecti has been at the central bank for most of his career, lately been responsible for money markets.

The government now has breathing room to work on a new economic masterplan during a week-long holiday starting on Saturday.

Ecevit said Dervis would start his new post immediately.

Dervis said he was pleased to be back in Turkey.

"I am happy to be working again with Mr Ecevit with whom I worked many years ago.

"Turkey will surely right itself quickly. We have a lot of work to do now, so I will not say much," he said.

Turkey last week abandoned its currency peg, the heart of an $11 billion IMF program, and saw the lira plunge more than 30 percent after a public row between the president and prime minister sparked fears of instability.

The crisis led to the resignation not only of the central bank chief but also of the treasury head and stirred calls for a far-reaching government shake-up.

But Ecevit has fiercely resisted pressure to sack ministers, clearly fearing general instability in the government.

Government sources said no other cabinet changes were planned.

Dervis had been tipped for the central bank job but he was reportedly reluctant to become governor, fearing he would have insufficient power in that post alone.

The new job will give him significant influence over the Central Bank, as well as the Banking Supervisory Board which is charged with reforming the vulnerable banking sector.

Markets positive - but want more

The lira held up against the dollar on Friday amid hopes Dervis would improve Turkey's prospects.

The central bank fixing put the lira at 903,721/908,080 to the dollar, compared to 915,708/920,125 on Thursday. Stocks also ended up 1 percent.

The lira is recovering from the lows hit last week when it fell by 36 percent but current levels still indicated inflation would increase in March.

Landline monopoly Turk Telekom said on Friday it was raising call charges by around 20 percent, while energy prices have already risen 10 percent.

The stock market will be closed all next week for the religious holiday of Eid Al-adha, the Feast of the Sacrifice, but bond and money markets will open on Friday, March 9.

Turkish officials will work throughout the week on new economic measures to replace the three-year IMF disinflation programme wrecked by the collapse of the currency peg.

Haluk Akdogan, emerging market equity analyst and strategist and Schroder Salomon Smith Barney in London, said he was more interested in news of solid measures, particularly in the vulnerable banking sector, than Dervis's appointment.

"I don't think appointing X or Y to position X or Y is enough, that's misleading the public," he said.

Ecevit said on Wednesday he was hoping for a multi-billion dollar loan to help weather the crisis, but there was no indication from the IMF or other international lenders that such a large loan would be forthcoming.

Reuters contributed to this report.

Turkey moves to stabilise currency
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Turks protest at financial crisis
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Turkey promises new economic measures
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Ecevit rides out political storm
February 25, 2001
Turkey: Memories of past meltdowns
February 22, 2001
Turkey currency float crisis
February 23, 2001

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