Government unveils relief measures for tradesmen

Ankara - Turkish Daily News

The government yesterday announced a set of measures to ease the problems of tradesmen, who staged nationwide demonstrations last week protesting the government's inertia towards the ongoing economic crisis.

Announcing the relief measures, State Minister responsible for the economy Tunca Toskay said state-owned small- and medium-sized businesses lender Halkbank would charge a pre-crisis interest rate of 55 percent on tradesmen's outstanding loans, compared to around 90-110 percent at present.

Halkbank will keep the interest rate at 55 percent until the end of the year and the Treasury will compensate the duty losses the bank will incur, Toskay announced.

The government also decided to extend a tax favor, enabling taxpayers to apply until April 30 for deferral and rescheduling of tax debts. The earlier deadline was March 16.

The cabinet also agreed to ease payment terms of accumulated social security contributions by employers, similar to the deferral granted by the Finance Ministry for tax debts.

Asked whether the measures aiming to relieve tradesmen contradicted the government's economic program, Toskay said the Economy Minister Kemal Dervis-led economic management has conceded to the required budgetary allocations.

Another subsidy plan similar to that of Halkbank appeared in relation to state-owned farm sector lender Ziraat Bank, as Toskay said funding would be provided within the budget to lessen the impact of Ziraat Bank's high interest rates on concerned circles.

At yesterday's three-and-a-half hour meeting, the government also agreed on principle to a report outlining measures to slash state spending, Toskay added.

In addition, the ministers agreed to compensate civil servant wages for inflation on April 15. According to a provision in the budget law, civil servants should receive an inflation adjustment plus a 2 percent welfare bonus as the first three months' consumer inflation amounted to 10.7 percent, exceeding a wage hike of 10 percent allowed for the first half of the year. Toskay said wages would likely be increased by 2.7 percent in April.

Toskay also said the new Central Bank Law, which would provide the money authority with broad powers, was up for signing by ministers. The bill, which is among emergency legislative measures announced by Dervis, aims to align the Central Bank's functions to EU norms, thereby furnishing it with independence over the monetary policy.

However, intra-cabinet disagreement over a bill that would facilitate the privatization of Turkish Airlines (THY) remained, as the Transport Ministry insists that the national carrier's flight fares should win its approval, business network CNBC-E reported yesterday.

The loss-making enterprise did not appeal to investor appetite and a sell-off tender was canceled recently with no bidders showing up to buy a 51 percent stake.

The civil aviation bill drafted by the Transport Ministry retains its authority over the THY's price setting mechanism and allows it to set minimum and maximum fares to be charged by the carrier.

State Minister responsible for privatization Yuksel Yalova ruled out the possibility of signing the bill, the channel reported.

The version drafted by Yalova allows THY to set flight fares without requiring Transport Ministry approval. Mandatory fare discounts in fares is seen as a major contributor to THY losses.

Eximbank unable to provide sufficient export financing

Eximbank plans to launch syndicated borrowing in May to roll over a $160 million loan raised last year

Ankara - Turkish Daily News

Turk Export-Import Bank is managing to meet only 10 percent of the financing needs of exporters, as budgetary allocations have yet to be disbursed and the bank is planning this year's first borrowing in May, the Anatolia news agency reported yesterday.

It isn't possible to create a competitive edge for exports before a balance point can be reached between exchange rates and financing costs, Eximbank General Manager Ahmet Kilicoglu said.

Kilicoglu said Eximbank has so far received TL 35 trillion of a total TL 300 trillion budget funding allocated for this year. Another TL 20 trillion is due to be transferred soon, he added.

Eximbank plans to launch a syndicated borrowing in May to roll over a $160 million loan raised last year, Kilicoglu said. "Rollover terms depend on the economic program and Turkey's situation," he added.

Amid a shortage of resources Eximbank is thus able to provide only 10 percent of the required export loans. At least $400 million of requested loans remain on the waiting list, Kilicoglu said.

Kilicoglu predicted that Turkey's exports could exceed $30 billion this year driven higher by neighboring markets such as Russia and other oil exporting countries thanks to the rise in oil prices. He indicated that the expected slowdown in European growth and the recession in the U.S. economy could marginally affect Turkey's exports. The government has projected $31 billion in export proceeds this year, compared to $31.2 billion in 2000.

The general manager went on to say that the surge in exports in the first two months of the year has stemmed from delays due to new year's and religious holidays in December.

Turkey's exports rose by 14.4 percent year-on-year in the first two months, according to Turkish Exporters Union figures.

"These figures can't be considered as a sound indicator. The impact of exchange rates on exports will emerge later on. No one is able to foresee what will happen," Kilicoglu said.

"But we can't make exporters wait until the markets are settled, because of the nature of the sector. The national economy is shrinking on one hand. Turkey's recovery depends on reviving foreign demand for tourism and exports," he added.

Kilicoglu pointed to the recent surge in exchange rates, which he said was blurring the vision of exporters. "Key is the announcement of the economic program, whereafter the size of potential international assistance will emerge," he said.

Treasury holds six-month bill auction

Ankara - Turkish Daily News

The Treasury is to sell six-month bills today seeking to borrow a minimum net amount of TL 500 trillion.

The bills will be value dated April 11, and redemption is scheduled for Oct. 10, 2001, according to the Treasury's monthly borrowing plan.

The auction will be based on a single pricing system where the Treasury sells papers at the highest acceptable yield, regardless of what individual bidders offer.

The Treasury will hold a total of five bill auctions on a single-pricing basis in April. It plans to borrow a minimum of TL 2 quadrillion, against a TL 1.4 quadrillion domestic debt and $1.4 billion external debt service this month.

The Treasury faces its heaviest monthly redemption on April 25 when it must service TL 1 quadrillion domestic debt.

Finance Minister Oral to attend Ecofin meetings

Ankara - Turkish Daily News

Finance Minister Sumer Oral will represent Turkey at an unofficial gathering of the EU Finance and Economy Ministers Council (Ecofin) scheduled to be held in Sweden on April 20 to 22, the Anatolia news agency reported yesterday.

The meeting will focus on the EU enlargement process and economic crisis management, Anatolia said.

Ministers and central bank officials from the 13 EU candidate countries will attend meetings for the first time, in the follow-up of a decision to include the candidates in a strategy drawn up in Lisbon and aimed at improving the EU's competitive strength.

The meeting will be attended by EU Commissioner responsible for economic affairs Pedro Solbes and Commissioner responsible for the domestic market Fritz Bolkenstein and Commissioner responsible for enlargement Guenther Verheugen.

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