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Anadolu Agency: News in English, 00-12-22Anadolu Agency: News in English Directory - Previous Article - Next ArticleFrom: The Anadolu Agency Home Page at <http://www.anadoluajansi.com.tr/>Anadolu AgencyANADOLU AGENCY NEWS 22 DECEMBER 2000 Friday CONTENTS
[01] TURKEY-PRESS SCANThese are some of the major headlines and their brief stories in Turkey's press on December 22, 2000. The Anadolu Ajansi does not verify these stories and does not vouch for their accuracy.HURRIYET (LIBERAL)INMATES RUNNING AWAY FROM PRESSURES OF TERRORIST ORGANIZATIONSWERE SHOT BEHIND The operation came to an end in Canakkale Prison in its third day. The inmates who listened to the calls of security forces to surrender, were shot behind by the other inmates who are the members of illegal terrorist organization. One of the inmates who was shot, died in the hospital. The women inmates who managed to run away said their friends also wanted to run away, but the terrorist organizations were keeping them in the prison with the gun power. TWO BILLION U.S. DOLLARS FOR TURKEY MILLIYET (LIBERAL)DEATH ROBOTSIt has been revealed how the the militants of the terrorist organizations who were on death fasts in Bayrampasa Prison were brainwashed and how they were turned into robots. The gendarme forces entered into the Bayrampasa Prison by demolishing the walls of the prison. Gas masks made of plastic bottles and cotton were made by the inmates against the gas and tear bombs. Two kalashnikov rifles and flame throwers made of LPG canisters were also seized in the prison. The activists were sent to the Edirne F type Prison. THEY SHOT THEIR FRIENDS SABAH (LIBERAL)AMNESTY LAW PASSED, RELEASE FROM PRISONS SOONWhen the parliament once more approved the amnesty law which was vetoed, without making any changes, President Ahmet Necdet Sezer approved the law. Sources said that Sezer will not apply to the Constitutional Court regarding the amnesty law, fearing that the scope of the amnesty can be broadened. A total of 35 thousand people are waiting to be released. Premier Ecevit said that the inmates may not be released from the prison until the Eid al-Fitr holiday due to the legal procedures. MOODY'S SAYS TURKEY'S RATING OUTLOOK REMAINS POSITIVE CUMHURIYET (LEFT)SEZER SIGNS CONDITIONAL RELEASE AND SUSPENSION IN PUNISHMENT BILLPresident Ahmet Necdet Sezer, who previously vetoed the Conditional Release and Suspension in Punishment Bill, signed the bill on Thursday. Sezer sent back the bill to the parliament as it was ''against the law and was containing controversial issues''. The bill was then adopted by the Parliament and sent back to the President without any changes. Sezer who signed the bill wouldn't apply to the Constitutional Court for the cancellation of the bill. AKGUL, CHAIRMAN OF PARLIAMENTARY HUMAN RIGHTS COMMISSION SAYS RADIKAL (LEFT)PROTESTS CONTINUE FOR OPERATIONS IN PRISONSThe demonstrations which are held to protest the recent operations in prisons are continuing. The security forces sprayed water to the protestors in Istanbul, who illegally protested the recent operations in the prisons. Two protestors, including a woman, were detained during the protests. FOUR CASUALTIES IN CANAKKALE PRISON YENÝ BÝNYIL (LIBERAL)LONG HOLIDAY TO STARTThe ten-day holiday will start as of Friday evening. The tours to foreign countries are full. There is a great interest in Turkey's winter tourism centers. But, the snowfall which is influencing almost all parts of Turkey, is a bad surprize for the people who are going on holiday. The snow thickness in Bolu Mountain reached 25 centimetres while in Kartalkaya 40 centimetres. IMF APPROVES LOAN FOR TURKEY TURKIYE (RIGHT)CAPITAL PUNISHMENT ABOLISHEDUnder the amnesty law, the capital punishment will not be carried out. The dossiers of the people who were sentenced to capital punishment which are waiting at the parliament, will be returned. WHO WILL BENEFIT FROM NEW LAW? ZAMAN (CONSERVATIVE)SEVEN WOMAN BURN THEMSELVES, RESISTANCE ENDSWhen the health condition of some death fasting inmates in the Usak Prison became serious, the gendarme forces staged a new operation. Seven woman inmates burnt themselves in this prison. FIRST STEP IN MARMARAY [02] LETTER OF INTENT SENT TO IMF SAYSINFLATION TARGET FOR 2001 IS 12 PERCENTWASHINGTON D.C., - The letter of intent sent to the International Monetary Fund (IMF) by Turkey said that the inflation target for 2001 is 12 percent. The letter of intend was accepted by the IMF Executive Board on Friday. Recep Onal, the state minister for economy, and Gazi Ercel, the Central Bank governor, signed the letter of intend and sent it to Horst Kohler, the Managing Director of IMF. The letter was dated December 18, 2000 and composed of 62 articles. In the first seven articles of the letter of intent, the economic developments marked in 2000 in Turkey were explained. The following articles were about the targets for 2001 and 2002 and the measures that can be taken in the light of the Stand-By agreement signed in 1999 and the new arrangements. The developments in Turkey were evaluated under titles like the policy objectives for 2001-2002, general macro-economic management strategy, fiscal policy, public debt management, incomes policy, monetary and exchange rate policies, structural issues, privatization, social security reform, fiscal management and transparency, tax administration, agricultural policies and banking sector. The 2000 inflation rate was expected to be around 38 percent, the letter of intent said, adding that the inflation rate in 2001 is targeted to be 12 and to be decreased to single digit figures by the end of 2002. The letter of intend predicted a real Gross National Product (GNP) growth rate in the range of 4-4.5 percent in 2001 and said that the growth should accelerate to 5-6 percent in 2002 and beyond. The first goal of the government is to reach inflation target and to provide developments in foreign transactions, the letter of intent noted. Touching on incomes policy, the letter of intent said that in the negotiations of the public sector, the wage contracts for public workers, the overall macroeconomic targets of the program, as well as the need to strengthen the financial position of the State Economic Enterprises (SEEs) will be taken into account in addition to the wage policy described for the civil servants. Referring to privatization, the total amount receivable for privatization deals concluded in 2000 amounts to 5.6 billion U.S. dollars, the letter of intent said. The letter of intent added that 3.5 billion U.S. dollars of this amount is collected in privatization receipts in 2000 while 2.1 billion U.S. dollars which have already been secured for 2001, will be collected in 2001. Thus, while falling short of the original target, the total amount receivable for privatization deals concluded in 2000 amounts to US$5.6 billion, as much as collected since the privatization program started in 1986, the letter of intent emphasized. The letter of intent said that altogether, and taking into account privatization receipts expected in 2001 from deals concluded in 2000, they expect total privatization receipts to reach some 6-7 billion U.S. dollars (3-3½ percent of GNP) in 2001. The letter of intent said, ''with the exception of US$1.1 billion that will be used by the PA for operational costs and transfers to the SEEs, all the above privatization receipts, and any addition to them from whatever source, will be transferred to the treasury for debt reduction.'' Touching on tax administration, the letter of intent said that tax amnesty is not among goals. Referring to banking, the letter of intent stated that Turkish government is committed to strengthening the banking sector through a two-pronged strategy aimed at both strengthening discipline on and sustaining confidence in banks. [03] PREMIER ECEVIT ISSUES CIRCLUAR FOR RAPIDIMPLEMENTATION OF BAKU-CEYHAN PIPELINE PROJECTANKARA - Premier Bulent Ecevit issued a circular on Thursday for the rapid implementation of Baku-Ceyhan pipeline project. In accordance with the circular, all the concerned public institutions and organizations will extend support to the Pipeline Transportation Inc. (BOTAS) which has undertaken an important responsibility by the construction agreement. The circular foresees the conclusion of the project on time by acting rapidly and in a determined way in all the stages of the project which aims at transfering Caspian oil to western markets. The inter-governmental agreement was approved by the parliaments of concerned countries on September 10, 2000 and the other agreement which is about the legal, commercial and administrative conditions of the project was put into effect in Baku, Tbilisi and Ankara between October 17 and 19, 2000, the circular said. The circular noted that within this framework, the host company agreement, the key transfer construction agreement, and government guarantee document were signed. Under all these agreements, the BOTAS was charged as the institution which will carry out the project on behalf of Turkey, the circular stated. The circular emphasized that the implementation of the project in the earlier determined date and without and deficiencies depends on the efficient coordination and cooperation among public institutions and organizations. To this end, the circular said, ''all concerned public institutions and organizations will extend the necessary support to the BOTAS, which have undertaken important responsibilities by the key transfer construction agreement.'' -SOUTHEAST ANATOLIA REGION EXPORTS READY-TO-WEAR PRODUCTS WORTH OF The Southeast Anatolia region exported ready-to-wear products worth of 18 million 219 thousand U.S. dollars in the same period of last year. The data of Association of Southeast Anatolia Exporters show that the region mainly exported, women, men, and children garments, underwear, pants, jackets, socks, jumpers, bath robe, towel, coat, and sportswear between January-November 2000. The region exported ready-to-wear products mainly to the European Union(EU) countries, the U.S., Iraq, Syria, Iran, Saudi Arabia, Jordan, Israel, United Arab Emirates, Romania, Bulgaria, Russia, Azerbaijan, and Australia. [04] LAW ON CONDITIONAL RELEASE AND SUSPENSION OFPUNISHMENTS ISSUED IN OFFICIAL GAZETTEANKARA- The law on conditional release and suspension of punishments was issued on Friday in the Official Gazette and took effect. In accordance with the law, the capital punishments given for crimes committed before April 23, 1999 will not be carried out. The total punishment of those who are sentenced to life imprisonment will be reduced by ten years. The reduction will only be one time only (not for each punishment) and it won't be more than 10 years. The trials of the suspects who were filed a lawsuit on charges of crimes requiring capital punishment, life imprisonment, and more than ten years of imprisonment which were committed before April 23, 1999, will be heard. If the suspects are given punishments in these trials, the provisions of the conditional release and suspension of punishments will be applied for these suspects. The law on conditional release and suspension of punishments amends a part of the first article of the Law on Suspension of Punishments and Cases Regarding the Crimes Committed Through Press. In accordance with this amendment, the punishments of those who were sentenced not more than 12 years of imprisonment on charges of crimes committed through the press and on charges of the speeches made in meetings, congresses, conferences, seminars, symposiums and panel discussions, will be suspended. The suspension will be valid for three years. The law on conditional release and suspension of punishments excludes certain crimes. Crimes committed against the state, the president, rape, mistreatment, forming gangs, bribery, corruption, drug smuggling, blackmailing and causing forest fires are among the crimes that were excluded in the law. Inmates who committed a crime after being released following an amnesty will not benefit from the law. Prisoners who escaped from the prison can benefit from the law only if they surrender to the security officials one month after the law takes effect. [05] TREASURY UNDERSECRETARIAT:-''WORLD BANK DISCUSSED AND APPROVEDCOUNTRY ASSISTANCE STRATEGY FOR TURKEY'' ANKARA - The Treasury Undersecretariat said on Friday that the World Bank discussed and approved the country assistance strategy (CAS) for Turkey which covers three years. A statement of the Treasury Undersecretariat said that the loan will be around 5 billion U.S. dollars, including 2.4 billion U.S. dollar structural adjustment loan. The statement noted that the agreements on the 777.78 million U.S. dollar Financial Sector Adjustment Loan (FSAL) and 250 million U.S. dollar Privatization Social Support Project (PSSP) were also ratified by the World Bank Executive Board. These agreements will take effect on Friday, the statement said, adding that the first portion of the FSAL in the amount of 385 million U.S. dollars will be released after the agreements take effect. [06] KIVRIKOGLU, CHIEF OF GENERAL STAFF, ISSUES A MESSAGE TOCOMMEMORATE KUBILAY WHO WAS KILLED BY FUNDAMENTALISTS IN 1930ANKARA - Huseyin Kivrikoglu, the chief of general staff, said on Friday that the acts against the secular system of Turkey wouldn't be able to destroy the unity of the nation and the current constitutional order. Kivrikoglu issued a message to commemorate 3rd Lt. Kubilay who was killed by the fundamentalists who staged an uprising for the establishment of an order based on Shariah Law on 23 December 1930. Kivrikoglu said in his message that Kubilay was killed by the fundamentalists as he tried to protect the principals and the revolutions of Ataturk, the founder of modern Turkey. Noting that the secular system meant the sovereignty of science, reason, and conscience, Kivrikoglu said the fundamentalist acts wouldn't be able to destroy the current constitutional structure of Turkey. The Turkish Armed Forces would stand against such activities said Kivrikoglu and added that the Turkish Armed Forces would remain loyal to the democracy and secularism principals. -JUSTICE MINISTER TURK SAYS 20 INMATES LOST THEIR LIVES Turk said that an inmate escaped from Umraniye prison this morning and he surrendered to security forces and the security forces opened holes in the walls of the prison to ease the inmates' escape from the prison. Speaking to reporters, Turk said that the law on conditional release was published in the Official Gazette today, adding that this law brought the prisoners the chance of having a decent life. Turk said that the law will contribute to reaching a social peace in Turkey, adding that this is also an important step in respect of undertaking judicial and prison reforms in the country. Turk said that totally 644 inmates were transferred to F type prisons in Edirne, Sincan and Kocaeli following the operation in prisons. Twenty inmates died and 102 inmates were injured in the operations, said Turk and added that two security officials died and four security officials were wounded. Turk indicated that 193 inmates are under medical treatment in hospitals, adding that ''these incidents should never have had happened. However, the terrorist organizations in Turkey caused this situation in prisons and they also caused their friends to die. I hope this will be a lesson for the future.'' Turk said that press members will be permitted to visit Bayrampasa prison of Istanbul in the afternoon, adding that the things done by the terrorist organization there and the things it wanted to do will be seen. Turk stressed that 423 inmates in Umraniye prison continue to resist security forces, adding that one person escaped from the prison in the moring and surrendered. ''That prisoner told us that 45 inmates in the prison who are 'leading members' of the organization put pressure on their friends to continue resisting security forces. We hope this resistance to end soon without causing any casualties, because such a resistance does not have any meaning. It is time to end the bad incidents in Turkey. We expect our nation to support this intervention in prisons which was undertaken to bring human rights and state control to prisons,'' he said. Responding to questions of journalists, Turk said that the releases from prisons can start anytime. -FIRST TEN ARTICLES OF TURKISH GOVERNMENT'S LETTER OF INTENT The letter of intent is signed by State Minister Recep Onal and Central Bank Chairman Gazi Ercel and it is addressed to IMF Chairman Horst Kohler. It is consisted of 62 articles. Below is the first ten articles of the letter. 1- In our letter of December 9, 1999, requesting a three-year stand-by arrangement with the Fund, and in two subsequent letters—dated March 10 and June 22, 2000—requesting completion of the first two reviews, we described the main elements of our ambitious disinflation and fiscal adjustment program, charting the course of economic policies over 2000–02. This letter provides an update on economic developments since the completion of the second review, discusses our policy goals for 2001–02 in light of these developments, and outlines the key policy measures needed to achieve those goals. With this letter we also request the completion of the third and fourth program reviews, as well as access to Fund resources amounting to SDR 5.784 billion under the Supplemental Reserve Facility. 2-Steady progress has been made in achieving the key goals of our programme. We expect that by December 2000, the 12-month CPI inflation rate will be about 38 percent. This is above the program target of 25 percent, an overshooting that is partly due to the large and unexpected rise in international energy prices. However, it is about half the inflation rate at end-1999, and the lowest inflation rate since the mid-1980s. 3-Fiscal performance continued to be strong, meeting, by a wide margin, the program’s end-June and end-September 2000 fiscal performance criteria and indicative floors, respectively, for the primary surplus and for the overall balance of the consolidated government sector.For the whole year, we expect the primary surplus of the CGS to exceed the program target by some 1 percent of GNP. This, together with the fall in interest rates and the sizable amount of expected privatization proceeds, will lead to about a 3 percentage point decline in the public debt-to-GNP ratio (excluding the securities issued for the recapitalization of the banks taken over by the Saving Deposit Insurance Fund (SDIF)). 4-Total receipts from privatization will, however, fall short of the original program target, owing to delays in the conclusion of the sale of the GSM license and of part of Turk Telecom. We now project privatization receipts to reach US$3½ billion in 2000, against the original target of US$7½ billion. As actions to remedy this delay have already been taken, or are about to be taken. 5-Following the deep recession in 1998–99, economic activity—fueled by consumer spending, investment, and exports—recovered strongly this year. In light of these developments, real GNP growth in 2000 may exceed the program’s target range of 5-5½ percent. 6-The strong recovery of domestic demand, as well as the rise in international oil prices, has led to a sharp increase in imports. Although export volume growth has also accelerated and tourism revenues are projected to reach an historical peak, the external current account deficit is likely to widen this year to about 5 percent of GNP, against about 1 percent of GNP in 1999.The strong recovery of domestic demand, as well as the rise in international oil prices, has led to a sharp increase in imports. Although export volume growth has also accelerated and tourism revenues are projected to reach an historical peak, the external current account deficit is likely to widen this year to about 5 percent of GNP, against about 1 percent of GNP in 1999. 7-During the last ten days of November and in early December, Turkish financial markets experienced a period of high volatility.Those events, in the context of weaker international market sentiment for emerging economies, led to a loss of US$6 billion of foreign exchange reserves.Interest rates, however, skyrocketed to over 1,000 percent. The pressure on financial markets eased only with the announcement of a policy strengthening and the request of access to the Supplemental Reserve Facility. Policy objectives and overall macroeconomic management strategy for 2001-02 8-In spite of the recent financial market turmoil, the results achieved in 2000 are generally positive and have strengthened our resolve to achieve the program’s key macroeconomic goals—bringing inflation down to single digits by end-2002, restoring the viability of public finances and, in this way, setting growth on a sustainable path. In particular, there is a need to ensure that the improvement in domestic economic conditions is consistent with a viable external position, after the widening of the external current account deficit projected in 2000. More specifically, our policies for 2001 will be oriented to avoiding the risks that could arise from excessive domestic demand pressures, minimizing the likelihood of further slippages in inflation performance (thus preserving external competitiveness), and bringing down the external current account deficit to a more sustainable level. To this end, our overall macroeconomic framework for 2001, including fiscal policy, has been significantly strengthened with respect to the original program targets. Critical steps are also being taken in the banking area, with the goal of reducing the banking system’s vulnerability to shocks and speeding up its restructuring. Finally, new structural reform initiatives will be started, including in the critical area of privatization, a source of potentially large foreign exchange inflows. 9-A CPI inflation rate (December/December) of 12 percent in 2001. CPI inflation is targeted to be in the single digits by end-2002. A CPI inflation rate (December/December) of 12 percent in 2001. CPI inflation is targeted to be in the single digits by end-2002. 10-While we regard the above macroeconomic targets as mutually consistent, the primary goal of our policies in 2001 will be to ensure that the inflation target is achieved and that the expected improvement in the external position is realized. Achieving and sustaining over time a stable macroeconomic framework is the necessary condition for maximizing the growth prospects of the Turkish economy over the medium term. -ARTICLES 11-19 OF TURKISH GOVERNMENT'S LETTER OF INTENT The letter of intent is signed by State Minister Recep Onal and Central Bank Chairman Gazi Ercel and it is addressed to IMF Chairman Horst Kohler. It is consisted of 62 articles. Below is the articles 11-19: Fiscal policy 11- The primary position of the public sector (which includes the consolidated central budget, EBFs, local governments, SEEs, social security institutions, the CBT, and the unemployment insurance fund) will be strengthened not only with respect to the projected 2000 outcome, but also with respect to the original program targets. This strengthening will be instrumental in reducing overall macroeconomic risks and in lowering more rapidly the public debt-to-GNP ratio, which at end-2000 will still be above its average of the 1990s. 12-Our objective is to improve the primary surplus of the public sector by some 2 percentage points of GNP, from the projected 3 percent of GNP in 2000 to 5 percent in 2001 (against an original target of 3¾ percentage points of GNP). The public sector borrowing requirement is projected to decline from 18½ percent of GNP in 2000 to 10 percent of GNP in 2001. The operational deficit of the public sector (the deficit adjusted for the erosion in the real value of public sector debt due to inflation) is expected to fall from some 5½ percent of GNP in 2000, to 3 percent of GNP in 2001 (excluding interest payments of about 0.3 percent of GNP on the securities issued to recapitalize the SDIF banks taken over during 1998- 99). Public sector debt is projected to fall by 4½ percentage points of GNP, excluding the issue of securities for recapitalizing banks. In 2002, we intend to keep the primary surplus of the public sector at about the 2001 level. This is expected to be sufficient to keep the operational deficit at about the same level of 2001. 13-The targeted improvement in the public sector accounts will involve a coordinated effort not only at the level of the central government, but also at the level of the non-central components of the public sector. Regarding the central government, we expect the primary surplus excluding privatization receipts, interest receipts, and transfers of profits from the central bank to be at least TL 8,735 trillion in 2001 (5.7 percent of GNP, against 4.9 percent of GNP in 2000). After adjusting for the inclusion of the Public Participation Fund in the budget, this represents an improvement of 1 percentage point of GNP with respect to 2000. 14-In addition to the measures introduced in September 2000, which are expected to save some ¼ percent of GNP on an annualized basis, further steps are being taken in the run up to the approval of the 2001 budget, partly to offset the expiration of temporary measures that were introduced in the 2000 budget. 15-Civil servants’ wages will be raised in December so as to offset the excess of inflation over targeted inflation during 2000. As to the first half of 2001, wages will be raised by 10 percent in January. However, should CPI inflation exceed 10 percent, there will be an additional increase in civil servants’ salaries equal to the difference between the CPI inflation rate and 10 percent. The same policy (setting salary increases in line with targeted inflation with a later adjustment if inflation exceeds the target) will be applied also in the second half of 2001. Moreover, the hiring of civil servants in 2001 will be limited to 80 percent of civil servants retired in the previous year (except in the sectors of education, health, and security). 16-The primary balance of the SEEs is expected to improve from -1.5 percent of GNP in 2000 to -0.9 percent of GNP in 2001. 17-Enactment of the measures indicated in paragraph 14, and approval by the parliamentary planning and budget commission of the 2001 budget in line with the above-mentioned fiscal targets (and including provisions allowing the introduction of fees on electricity consumption), will be prior actions for the presentation to the IMF Executive Board of our request for the completion of the third and fourth reviews under the stand-by arrangement, and for access under the Supplemental Reserve Facility (henceforth "prior actions"). 18-The attainment of the 2001 fiscal targets will be monitored through a set of performance criteria and indicative targets. 19-A quarterly performance criterion on the primary surplus of the CGS excluding privatization receipts. The floor for end-2001 will be TL 8,110 trillion (5.2 percent of GNP); for the first quarter of 2001, monthly indicative ceilings will be in place (Annex B).An end-year performance criterion on the primary surplus of the CGS inclusive of privatization receipts, with quarterly indicative targets (Annex B). Quarterly performance criteria on the noninterest expenditure (excluding tax refunds) of the consolidated central government. -TRNC PRESIDENT DENKTAS: ''BRITISH BASE ADMINISTRATION SHOULD Earlier, Edward Clay, British High Commissary in Lefkosa's Greek Cypriot part had said that he had ''special responsibility'' for Cakurmas, the Greek man who was arrested for drug smuggling by Turkish Cypriot security forces. Denktas said Turkish Cypriot man, Omer Gazi Tekogul who was arrested for allegations of drug smuggling after being kidnapped by the Greek Cypriot police said during his interrogation that he was constantly being provoked by the Greek Cypriot police. Tekogul was living in Pile. The TRNC president said the British administration should feel the responsibility they feel towards the Greek Cypriot man also towards Tekogul. ''If they act like this, it is not likely to reach an agreement with them. The Greek Cypriots have no justice. Therefore, we have to protect our state. The Greek Cypriots will see that they could not reach anywhere if they don't accept our equality as a state. Then, maybe there could be an agreement,'' Denktas commented. -CENTRAL BANK GOVERNOR ERCEL SAYS DOMESTIC NET ASSESTS Ercel released a statement regarding the monetary and exchange rate policies for 2001. Ercel indicated that the policy of domestic net assests will be more flexible and the monetary policy can be implemented in a more active way in the second half of 2001 together with the implementation of the progressively widening band. Ercel said that the monthly increase of the central rate of exchange has been announced as 0.85 percent in the second part of 2001, adding that the band of rate of exchange will progressively increase to 7,5 from June 1, 2001 to December 31 2001, to 15 percent till June 30, 2002 and to 22.5 percent till December 31, 2002. One U.S. dolar will be equal to 0.77 EURO. ''Foreign exchange rates will be determined freely at the interbanks foreign exchange market and the Central Bank won't permit the foreign exchange basket to exceed the foreign exchange limits,'' said Ercel. Ercel pointed out that they aim the domestic net assests maximum value to be 480 trillion liras on September 30, 2001 and 950 trillion liras on December 31, 2001. Stressing that the monetary policy will be more actively implemented by having a more flexible interest policy, Ercel said that this will be one factor of reaching the inflation target. Ercel added that the Central Bank is determined to implement successfully the dis-inflationary programme put into enforcement to reduce the inflation number to single digits. -TURKISH FISHERMEN RESCUE TWO GREEK FISHERMEN Banagiottis Argieres (42) and Biraksidelis Benekes (37), the Greek fishermen tried to continue their way after their engine broke off, but they lost their direction and stopped after hitting the rocks of Kiremit island which is offshore Gumusluk hamlet of Bodrum. The two fishermen had medical treatment in Gumusluk hamlet after being rescued by Turkish fishermen and coast guard teams. After completion of the necassary proceedings, they will be sent to their country. -BAYRAMPASA PRISON OPENS TO PRESS MEMBERS Press members started at 14.15 local time to enter the prison in groups. Press members will probably be permitted to visit the operation area in C block of the prison where 12 inmates died. -ARTICLES 20-62 OF TURKISH GOVERNMENT'S LETTER OF INTENT The letter of intent is signed by State Minister Recep Onal and Central Bank Chairman Gazi Ercel and it is addressed to IMF Chairman Horst Kohler. It is consisted of 62 articles. The letter's articles 20 and 21 is on policies regarding public debt management. Articles 22, 23 and 24 are explaining the government's incomes policy. Articles from 25 through 31 are on monetary and exchange rate policies. Structural issues are explained in articles 33 through 38. Artic 39 is on social security reform. Articles 40, 41, and 42 are explaining transparency and fiscal management. Article 43 is on tax administration and agricultural policies are listed in articles 44, 45 and 46. The letter's articles 47-60 which are on banking is as follows: 47- The government is committed to strengthening the banking sector through a two-pronged strategy aimed at both strengthening discipline on and sustaining confidence in banks. 48- The Banking Regulations and Supervision Agency (BRSA) has legally taken on all responsibilities granted to it by the Banking Law approved in June 1999 and became fully operational as of end-August 2000, meeting a structural performance criterion. Ban 49-The BRSA carefully monitors the condition of all banks through off-site analysis of bank balance sheet and income reports and through on-site examinations. 50-The government announced on December 6 a temporary full guarantee of depositors and other creditors (except deposits by owners, deposits in connection with criminal activities, subordinated debt, and shareholder equity). The guarantee covers all domestic deposit-taking banks (including foreign branches of domestic banks for which consolidated accounts have to be submitted to the BRSA) and will be administered by the SDIF according to the Banking Law. The guarantee is given effect by the BRSA intervening in banks that are insolvent or otherwise unable to meet their commitments. In a similar fashion, eight banks were intervened over the past years, thereby ensuring continuous access by depositors and other creditors to their assets. The technical work describing the existing legal framework for the guarantee is underway. This will lead to a public announcement clarifying the nature and scope of the guarantee fully protecting depositors and other creditors (including the legal and operational aspects) and to a protocol between the Treasury and the SDIF on the modalities governing the financing of the guarantee’s operations. The public announcement will be made no later than January 15, 2001 (a condition for the completion of the fifth review.) 51-The financial needs of the SDIF will continue to be covered by loans from the Treasury. The interest rate charged on the loans to the SDIF, as well as the schedule of payments of interest and repayment of principal, will be in line with the financial needs of the SDIF, including its need to build up a sufficient amount of liquid reserves. To insure that the SDIF will be able to resolve (liquidate, or recapitalize and sell) intervened banks in the least cost manner, without any disruption to depositors and other creditors, the SDIF has the authority to borrow resources from the Treasury as needed. 52-On November 16 the BRSA announced its strategy to deal with the resolution of the ten banks then under its control. In developing the strategy the BRSA had available to it the recommendations of the consultants who were hired in July to advise the central bank on this matter. 53-The banks were recapitalized to at least 8 percent of risk-weighted assets through the transfer of government securities on December 7. Their losses were written off against the capital thereby created. Strict fit-and- proper criteria were adopted in a new regulation issued by the BRSA for ownership of banks. The new regulation was published in the Official Gazette on November 5 paving the way for the selection of potential investors in the banks owned by the SDIF. 54-The financial restructuring for the two banks acquired by the SDIF in October 2000 will be carried out and detailed plans for their resolution will be announced to the public by end-January 2001. 55-As part of the above strategy, nonperforming loans of banks to be resolved will be transferred to the AMU. In keeping with the policy of openness, and to maximize recovery prospects, the BRSA will disclose to the public the procedures that it has adopted for the operation of the AMU. 56-The resolution of any bank intervened in the future, as called for in the Banking Law, will be handled following procedures similar to those described in the above paragraphs. 57- Regarding the state banks, the stock of duty losses of Halk Bank and Ziraat Bank will be converted into securities bearing market interest rates, in line with progress in implementing the restructuring plans of these banks.The interest on the stock of duty losses will accrue in 2001 at a rate equal to the monthly weighted average of treasury bill and discount bond rates times 1.33 for Ziraat Bank and times 1.60 for Halk Bank. The strategy to privatize the state banks will proceed on the basis of the law enacted in November 2000. 58-Consultation with the banking community on draft new regulations on internal risk management systems and on adjusting capital adequacy requirements to reflect market risks is ongoing and has delayed their adoption from end-August, as originally planned. The regulations will be adopted by end-January 2001 (a structural benchmark) and will be effective as of January 1, 2002. 59-As required by the banking law approved in June 1999, the BRSA will issue by end-January 2001, a regulation redefining indirect exposure to shareholders (connected lending). 60-As for the tax deductibility of loan loss provisioning, a tax regulation will be adopted providing for the full deductibility of the provisions that banks are mandated to make based on bank supervision regulations. At the same time, the deductibility of general provisioning will be eliminated. This regulation will be adopted by end-March 2001 and will be implemented with effect from April 1, 2001 (a structural benchmark). The last two articles 61 and 62 are consisted of regulations on statistical issues.
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