Babacan Says Talks On Loan Will Start With U.S. Officials In June

ANKARA - State Minister Ali Babacan said on Monday, ''talks with U.S. Treasury Department officials on 1 billion U.S. dollars in grants or 8.5 billion U.S. dollars in loans will start in June as a part of additional support from the United States.''
Asked if a concession was in question for completion of the fifth review and legalization of structural reform, Babacan said, ''it is out of question for us to make commitments about the laws. These laws will be taken up in the natural process of the parliament. If we list them according to their priority, social security laws are of priority. Legalization of social security bills can be a precondition for the fifth review. Also, these laws are of importance for keeping the 6.5 percent non-interest surplus.''
When a reporter recalled about the financial pressure on the program, Babacan said, ''the non-interest surplus target for the first four months has been kept. Target for the following term has to be reduced and the program should be continued determinedly. 6.5 percent non-interest surplus is a fairly aggressive and high target. But, the debt stock has to be decreased. The non-interest surplus target will be implemented without any concession. This is a hard target.''
Asked about the collective contracts of public employees, Babacan stated that collective bargaining talks would start in the following term and said, ''we want to increase welfare of our employees as economic situation is bettered.''
Replying a question on delay in structural reforms, Babacan said, ''our deals with the IMF and World Bank are the prior programs which we believe right for Turkey. The amount of loan we will draw from IMF till 2004 is 4 billion U.S. dollars. The total amount of debt we will pay in 2003 is above 90 billion U.S. dollars. Implementation of economic program with both IMF and World Bank is important for trust and support of international monetary organizations.''
They were not in favor of passing 15 laws in 15 days as in the past, Babacan noted.
Babacan said that they thought that it would be appropriate not to intervene in natural working process of the parliament.
Asked about the Central Bank and foreign exchange rate, Babacan said that the Central Bank was an autonomous organization and that autonomous structure was important in countries which were successful in fight against inflation.
Babacan went on saying, ''the priority of the Central Bank is the price stability. One of the important means is the overnight interest rates. As the war is over, significant deposits were made in April and May. A great deal of that figure was foreign exchange. People were directed to Turkish liras (TL). This is a pleasing development in the long term. But, it is a difficult situation for the exporters. Price stability is important but it is so natural to take into consideration some other targets besides the price stability.''
There were two important issues in front of the government, Babacan pointed out and named them as the program and reforms required for European Union (EU) membership.
When a reporter recalled about the words of Rifat Hisarciklioglu, the Chairman of the Union of Turkish Chambers and Commodity Exchanges (TOBB) that ''whenever foreign exchange fell and interest rates were high, a crisis occurred in Turkey'', Babacan said, ''markets set the floating exchange rate regime. Floating exchange rate regime is a system absorbing the internal and external shocks. The situation is not the same when fixed exchange rate regime is implemented.''
Babacan added, ''when the state says I am quitting it after a certain point, a big fluctuation occurs. An artificial problem is in question at the moment. When the current deficit reaches a point determined by everybody, there is an upper movement in the foreign exchange rate like it or not. We have to be patient. It is difficult to solve 40-year problems immediately.''

(BRC-Öª) 02.06.2003