Armenian, Assyrian and Hellenic Genocide News

IMF OKs Turkey's $7.5 Billion Loan
by By Suzan Fraser - The Associated Press
Posted: Friday, December 08, 2000 02:27 am CST

ANKARA, Turkey (AP) - The International Monetary Fund on Wednesday agreed to grant Turkey $7.5 billion in emergency loans to put an end to weeks of financial turmoil.

The amount exceeded expectations and sent Turkey's stock market soaring 18 percent - on top of a nearly 20 percent jump the day before. At one point Wednesday, the market rose so quickly that trading was halted.

IMF Director Horst Kohler said the agency fully supported Turkey and would grant the nation $7.5 billion in loans in addition to $2.9 billion promised under an agreement signed in January.

Prime Minister Bulent Ecevit, who announced the loan deal, pledged to strengthen the banking sector, speed up privatization and press ahead with an IMF-backed anti-inflation program. Central Bank chief Gazi Ercel said Turkey would send the IMF a letter outlining the reforms it would undertake.

``The aim is to create a healthy banking sector,'' Treasury Undersecretary Selcuk Demiralp said.

``The bleeding has stopped,'' said Ali Bilge, editor of Economy, Administration and Finance magazine. ``But how the wound will heal will now depend on the measures that the government will carry out.''

In a show of Turkey's importance to the United States, U.S. Treasury Secretary Lawrence Summers quickly voiced Washington's support for the deal.

``We look forward to strong and immediate implementation by the Turkish authorities of the steps vital for the restoration of confidence and financial stability,'' Summers said in a statement. Turkey, which borders Iraq and Iran, is a close U.S. ally and is seen by Washington as a pillar of stability in an unstable region.

Turkish markets have been in turmoil for the last two weeks with foreign investors dumping their stocks, trading their Turkish lire for dollars and pulling the money out of the country, forcing the Central Bank to sell $7 billion in dollars to cover the shortfall.

Foreign investors were scared off by allegations of corruption in the banking sector after 10 banks were bailed out by the state.

``I particularly welcome the government's firm commitment to implement a bold set of measures to strengthen the soundness of the banking sector, aimed at tackling the root causes of the current problems,'' Kohler said in a statement read by Michael Deppler, the IMF's European affairs director.

The stock market began to rebound Tuesday, after losing more than 40 percent of its value in two weeks. The Istanbul Stock Exchange's main index, the IMKB-100, gained 19.45 percent Tuesday on reports the loan would be approved and 18 percent more by Wednesday afternoon after the loan was larger than expected.

Deppler said an initial $2.8 billion would come Dec. 21, followed by more funds in January, February, March, June and November.

Turkey pledged in January to reduce its once 100 percent inflation to a single-digit figure by 2002. Turks also want to reduce inflation to become members of the European Union, which accepted the nation as a candidate last year.

Related Information...

Armenian, Assyrian and Hellenic Genocide News Archives