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behind on IMF targets By Leyla Boulton 1st July, 2001. The International Monetary Fund faces a challenge in Turkey which shows signs of backsliding on reforms agreed in return for a $15.7bn IMF-backed bailout. Bülent Ecevit, Turkey's prime minister, said on Saturday that his three-party coalition had met conditions agreed with the IMF in full but that further "debate" could be expected over various reforms as a function of democratic government. However, analysts say that the government has already fallen short of fully implementing at least two of the conditions agreed with the IMF for the release of a $1.5bn loan tranche at an IMF board meeting scheduled for Tuesday. Having passed a law to close down Emlak, an unviable state-owned bank, Ankara is unlikely by Tuesday's board meeting to have revoked the bank's licence, an action promised by the government for the end of May. The bank was controlled by the National Action party, (MHP), the second largest coalition partner. Its closure was resisted in parliament and a law belatedly passed last month has still to be signed by Ahmet Necdet Sezer, the president. Another concern for the IMF - which has the option of postponing its board meeting - is how far Ankara has kept its promise to appoint a professional board and management "with relevant private sector experience" to overhaul Türk Telekom, the bloated utility that has also been controlled by the MHP. The MHP, which has been particularly obstructive, is seen by some analysts as positioning itself to campaign in future elections against "foreign interference" represented by the IMF and Kemal Dervis, the economy minister who joined the government from the World Bank in March. Although the Treasury, under Mr Dervis was in theory empowered to appoint the new Türk Telekom board, the MHP chose four of the seven new members. The new board then on Friday reappointed the current general manager, Ibrahim Hakki Alpturk, an MHP supporter who does not speak English, a must for high-level telecommunications executives. More important, his affiliation to the MHP, which has promised its supporters state sector jobs, makes him unlikely to push for the rationalisation needed to make Türk Telekom attractive for privatisation. Coalition politicians have also sniped at Mr Dervis, who does not belong to any party. Analysts warn that against such a backdrop, interest rates are unlikely to fall as far as required by the programme to help resume growth in the economy - which shrank 4.2 per cent in the first quarter - and bring Turkey's high public sector debt under control. Political bickering helped destroy the country's previous IMF-backed programme, which collapsed with a devastating devaluation in February. http://www.ft.com |
