Positive reaction to Turkish plan

Turkish police were braced for futher demonstrations when the economy plan was announced

ANKARA, Turkey -- Turkish financial markets reacted positively to an economic rescue programme after months of uncertainty.

The plan replaced an $11.5 billion International Monetary Fund-backed anti-inflation package that collapsed in February after political turmoil unsettled markets and forced a devaluation of the currency.

Shares on the main Istanbul index jumped nearly five percent to close on Monday at 9,378.99.

The lira strengthened against the dollar in a central bank auction, showing a depreciation of 41.6 percent from pre-crisis levels, off last week's lows of about 47 percent.

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Economic minister Kemal Dervis told squabbling political leaders there could be no retreat from an economic rescue programme unveiled over the weekend.

"We've burned our ships, we've burned our bridges," Dervis was quoted Monday as telling several newspapers.

But the central bank's auction to buy dollars -- the first since it began limiting foreign currency sales on March 28 to stabilise the lira and conserve reserves -- closed without any deals, indicating that banks were not yet ready to give up dollars.

Dervis has stressed Turkey's three-party coalition government must back the programme if it is to succeed.

"The government supports the programme, and the programme supports the government," he was quoted as saying by the Radikal newspaper.

Slow reforms

Prime Minister Bulent Ecevit said on Saturday that coalition leaders supported the programme "from the heart and with determination."

Tens of thousands took to the streets last week to demand Ecevit's resignation, but he has said he will not quit amid efforts to rescue the economy.

The new programme rests on reining in state expenditures and securing foreign credits.

On Saturday Dervis said he hoped Turkey could win $10 billion to $12 billion in foreign credits this week.

The IMF, whose officials are in Ankara to discuss possible funding, has indicated it will release $6.5 billion left over from the now-defunct plan.

The World Bank may send $5 billion it had said it would provide last year, and Ankara has also appealed to the Group of Seven major industrial powers for assistance.

The IMF had criticised the slow legislative progress on reforms under the previous plan.

Parliament has so far passed just three of 15 draft laws on liberalisation and other crisis remedies that Dervis has said are crucial to obtaining foreign support.

Reuters contributed to this report.

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Turkish Government
International Monetary Fund
Turkish Prime Minister's office
The World Bank

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