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IMF Official Optimistic about Turkey - 2001-07-28

A top official from the International Monetary Fund (IMF) has expressed confidence with the implementation of Turkey's economic recovery program. The IMF's first deputy managing director said he believes Turkey's three-way coalition is fully behind and full committed to the program.

IMF official Stanley Fischer, speaking to reporters in Istanbul after two days of talks with Turkish political and business leaders, said the country's economic recovery program is being implemented successfully.

Mr. Fischer said positive effects of the program could be felt within a few weeks. But he also said Turkey's inflation rate - now about 60 percent - and interest rates are still too high and need to be pulled down quickly.

The International Monetary Fund has committed nearly $16 billion in loans to the recovery program which was launched in May to pull Turkey out of its worst-ever economic crisis. The crisis was triggered by a public dispute in February between the country's prime minister, Bulent Ecevit, and President Ahmet Necdet Sezer over the slow pace of the government's anti-corruption drive.

The underlying cause of the crisis, which has seen the Turkish lira lose about one-half its value, is largely rooted in the weakness of the corruption-saddled banking industry. Reform of the banking sector is among the chief conditions set by the IMF for releasing loans for the recovery program.

Another condition is the privatization of Turkey's heavily indebted state owned companies, including the landline telecommunications monopoly, Turk Telekom.

The IMF recently threatened to withhold the second installment of its loan package because of continuing resistance from the nationalist wing of Mr. Ecevit's coalition to the privatization of Turk Telekom.

The nationalists have since eased their anti-IMF statements. And nationalist telecom minister Enis Oksuz stepped down earlier this month, buoying market confidence. The IMF is now expected to release the third installment of the rescue package ahead of schedule.