Turkish Austerity Program Is Unveiled Amid Protests

Turkey’s economy minister Saturday warned of more hardships as he announced an austerity program that called for cuts in government spending, a cap on hiring and reforms of the ailing banking system.

At least 10,000 protesters took to the streets Saturday in Istanbul, demanding that the government resign amid economic chaos that has led to mass layoffs and rising prices.

The release of Minister Kemal Dervis’ economic program comes about eight weeks after the Turkish lira began to plummet, falling about 40% against the dollar and triggering skyrocketing interest rates, business failures and about 500,000 layoffs.

“We all should tighten our belts,” Dervis said. “Don’t expect me to produce policies to save us just for today. We can’t dynamite our future in order to save today.”

Observers say that with the political opposition in disarray, Turks might have little choice but to back the austerity measures.

Dervis said Turkey will slash government spending by 9% and freeze public hiring, except in the fields of health, education and security.

Turkey’s economy will likely shrink by 3% this year, Dervis said, but grow by 5% in 2002.

Inflation is expected to reach 57.6% this year but is forecast to drop to 16.6% in 2002, he said.

State banks, which have accumulated $20 billion in bad loans, will be reformed, branches will be closed, and workers will be offered retirement packages.

Dervis said Turkey needs $10 billion to $12 billion in foreign support, adding that by this week it should be clear how much money the nation will receive.

Prime Minister Bulent Ecevit pledged his government’s support for the program.

Dervis two weeks ago called on the government to pass 15 key economic laws before today, but he had to push that target date back three weeks. The government has only passed two of the laws.