Report: IMF agrees in principle to bail out loan for Turkey

By Suzan Fraser, Associated Press, 3/1/2001 10:00

ANKARA, Turkey (AP) The International Monetary Fund has agreed in principle to extend billions of dollars in loans to Turkey to help it overcome its latest financial crisis, a newspaper reported Thursday.

IMF officials were in Turkey waiting for the government to appraise the cost of the crisis before determining how much was needed, Turkey's Finansal Forum newspaper said.

The crisis, sparked by a feud between Prime Minister Bulent Ecevit and President Ahmet Necdet Sezer, led to a fall in the value of the lira, price hikes and lay-offs. It came after Turkey lifted its currency controls. The Turkish lira has lost 26 percent of its value in the last week.

Ecevit and Sezer, who clashed over the government's anti-corruption measures, held their first one-on-one meeting Thursday since their clash. Neither made a statement after the 20-minute meeting.

Ecevit said Wednesday that Turkey was hoping for $25 billion in loans. It was unclear if he meant $25 billion in new loans, or an increase to the previous $11 billion loan from the IMF.

The earlier loan, approved last year, was to support an anti-inflation program and to help the country cope with the effects of devastating earthquakes in 1999 and a financial crisis in November.

Finansal Forum said Turkish officials estimate that the country will need between $10 billion and $20 billion to overcome the effects of the current crisis.

President Bush sent a letter to Sezer stating that Washington's support for Turkey would increase, private NTV television reported Thursday. A U.S. Embassy official confirmed that Bush had sent a letter, but did not reveal its contents. The Turkish presidency had no comment.

Ecevit has said repeatedly that he will not resign and has refused to fire any ministers over the crisis. He was expected to meet with World Bank Vice President Kemal Dervis later Thursday and offer him the post of head of Turkey's Central Bank.

Analysts say that by appointing a man who has close contacts with international money lenders, the government is hoping to increase confidence in the economy and its chances of getting the loans it needs.

-- Anonymous, March 01, 2001