[stop-imf] Turkey: Turkey Economic Official Resigns (fwd)

[Robert Weissman]

Turkey Economic Official Resigns
Turkey's Privatization Minister Resigns After Comments That Caused Panic in
Stock Market
by SUZAN FRASER / Associated Press Writer
Source: AP, Thursday, 5/31/01

ANKARA, Turkey (AP) -- Turkey's minister for privatization resigned
Thursday after his comments suggesting likely delays in a law deregulating
the tobacco industry caused panic in the stock market.

Yuksel Yalova's words led to doubts about the government's commitment to
an International Monetary Fund-backed economic recovery program. The
markets recovered in afternoon trading after Prime Minister Bulent Ecevit
said the minister's comments did not reflect government views.

Yalova's ``comments today were unfortunate,'' Ecevit said in a written
statement after accepting his resignation. ``Our country is going through
a very sensitive period ... The minister, by resigning, has helped
overcome the panic.''

Istanbul's benchmark stock market closed the day up by 1.8 percent at
10,880 points after having fallen about 5 percent in a panicky morning
sell off.  Turkey's currency, the lira, closed the day down more than 3
percent against the dollar.

Mehmet Kececiler, the minister in charge of customs, will head the
privatization ministry until a new minister is appointed.

In a letter of intent to the IMF in April, Turkey's government promised to
pass the law deregulating the state-run tobacco industry by the end of
May.

But on Thursday, Yalova hinted at disagreements between the ruling
coalition over the reform program. ``We can't prepare a hasty scribble of
a law on an issue that concerns 600,000 people, just by sitting down and
saying, 'We promised it in May,''' he said.

In a written statement released later, Yalova said he had been
misunderstood and was merely looking out for the interests of ``millions
of tobacco growers.''

The government rushed to assure investors the law would be passed.

``There is no doubt that the program will be implemented in full, without
hitches,'' Economy Minister Kemal Dervis said.

The law is part of a program, backed by some $15.7 billion in loans from
the IMF, to end a crisis that has seen the currency plunge over 40 percent
against the dollar in three months, while unemployment has soared.

Yalova's resignation came hours before an IMF team was expected in Ankara
to review the progress in the recovery program. A favorable opinion will
lead to the release of a $1.6 billion portion of the loan.

Analysts said the day's volatile trading showed the fragility of investor
confidence in the Turkish government's determination to push through its
economic program. Recent weeks have seen disputes within the three-party
coalition over the program.

Earlier this week, a dispute over wheat prices paid to farmers split the
coalition, with the government's nationalist wing holding out for prices
above the level agreed to in the letter of intent to the IMF.

Critics say the government has begun to water down the program, which
contains sharp spending cuts, privatization and deregulation of key
sectors to edge the state out of the economy.