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IMF approves Turkish loan

WASHINGTON -- The International Monetary Fund has approved $8 billion in new loans to support Turkey's economic recovery plan.

The lira has lost nearly half its value against the dollar and hundreds of thousands of people have lost their jobs since the financial crisis struck in February.

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The IMF board of directors acted after reviewing Turkey's recovery programme which includes reforming its banking sector and selling the state-run telephone company Turk Telecom.

The loan also paves the way for a further $2 billion loan from the World Bank, meaning, said Economy Minister Kemal Dervis, that Turkey has a total war chest of $15.7 billion to help ease the crisis.

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turkey Turkey's economic crisis

Profile: Economy Minister Kemal Dervis
Profile: Prime Minister Bulent Ecevit
Profile: President Ahmet Necdet Sezer
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Q&A: Turkish economic crisis
 

"This is a debt, not a gift, and we should use it very well," said Dervis, who was brought into the Turkish cabinet earlier this year, after a long career at the World Bank, to set the reform agenda.

"Turkey could not have obtained loans under better conditions."

The IMF said in its announcement that Turkey could draw up to $3.8 billion immediately with further payments of $1.5 billion on June 25 and July 25 dependent on further progress reviews.

Brushing off reports of cabinet clashes, Dervis said the coalition government was united behind the recovery plan, which includes the privatisation of key state enterprises.

It predicts the economy shrinking by around three percent this year, but forecasts economic growth of five percent in 2002.

Monthly inflation is foreseen falling from the double digit figures of March and April to around two percent by year end.

Squabbling between Dervis and the communications minister from the far-right Nationalist Action Party (MHP) over the law allowing the privatisation of Turk Telekom -- which was eventually passed at the weekend -- kept markets on edge for weeks.

The privatisation will enable Turkey to sell almost all of the state telecommunications monopoly, although it sets a 45 percent limit for foreign ownership and allows the government the power to veto strategic decisions.

Turkey also approved a new banking law on Sunday aimed at avoiding mismanagement of funds and strengthening the sector which is seen as pivotal to turning the economy around.

State banks have run up losses estimated at some $20 billion and 13 private banks having been bailed out in the past two years.

The reform programme contained plans to sell off the banks taken over by the state with the largest, Sumerbank, opened for bids in September.

State banks Ziraat and Halkbank will be privatised within three years, the banking regulatory body said Tuesday, and another, Emlakbank, merged with Ziraat.







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