[stop-imf] Turkey, Mexico updates

[Robert Weissman]

The World Bank's Development News
May 8, 2001
Excerpts only.

- TURKEY'S DERVIS CAUTIONS ON WAGE DEMANDS.
- FOX PREPARING AUSTERITY PLAN FOR MEXICO.


TURKEY'S DERVIS CAUTIONS ON WAGE DEMANDS.

Turkey's economy minister Kemal Dervis Monday warned that failure of the
new economic program may drag the country into chaos and to a military
coup, Dow Jones says the dailies Milliyet and Sabah reported.

Dervis was meeting with a team from the labor union confederation Turk-Is,
led by chairman Bayram Meral, for collective contract talks for about
450,000 government-employed blue collar workers.

The government, citing the ongoing financial crisis, has offered no pay
raise for the first half of 2001 and a minimal raise for the second half
of the year, while the unions seek more generous payments.

According to the daily Milliyet, Dervis warned that the government "can't
hand out the cash it doesn't have ."

According to the Sabah, Dervis told the labor leaders that they have to be
less demanding under adverse financial conditions. "Otherwise a time may
come when even the current wages can't be paid," Dervis said.

Reuters adds Dervis urged cabinet colleagues to finish on Tuesday drafting
a law to sell a majority of Turk Telekom, one of several reforms demanded
by the IMF in return for $10 billion in crisis loans. "There would be
great advantage to finishing the work today," Dervis told reporters after
an early morning meeting with Communications Minister Enis Oksuz. "We are
using all our strength to wrap it up."



FOX PREPARING AUSTERITY PLAN FOR MEXICO.  The Mexican government is
gearing up for a series of austerity measures designed to offset a decline
in public revenues triggered by falling oil exports and a sharper than
expected economic slowdown, the Financial Times reports (p. 3,
US-edition).

President Vicente Fox is expected to announce details of a program to
reduce federal government spending by 30bn pesos ($3.2bn) later this week.
The belt-tightening coincides with 3.375bn pesos ($365m) in budget cuts
announced yesterday by the Treasury Ministry. The two separate but related
measures come amid expectations that Fox will reduce the government's 4.5
percent growth target for the year. On Friday, he estimated growth for the
first quarter of the year would reach 2 percent - a sharp decline from 6.9
percent last year.

Treasury officials said yesterday they would make the equivalent $365m in
spending cuts. The details of the cuts would be unveiled later this week,
although the reductions would probably come from planned future
investments and

current spending, they said. The 30bn pesos savings program to be
announced by Fox is expected to include a voluntary retirement program for
government workers. The federal government has called for a 10 percent
reduction in civil servants.

As part of the effort to reassure international markets, Francisco Gil,
the treasury minister, said last week Mexico was mulling the idea of
asking for a contingency credit line with the IMF.