Turkey's plea for $12bn

Dervis: I hope we will obtain adequate foreign aid

Turkey's newly appointed economy minister, Kemal Dervis, has admitted that the nation needs $10-$12bn of additional foreign aid in order to weather its economic crisis.

I think it is in the interest of the international community to provide modest finance

Kemal Dervis

Last week, Turkey and the International Monetary Fund (IMF) agreed a new economic programme aimed at reviving foreign investors' confidence after last month's financial crisis.

The IMF is deciding whether to bring forward $6.25bn of scheduled loans to Turkey, but has not said whether it will increase the amount it has allocated.

But Turkey says that it needs more immediate cash in order to survive its financial difficulties, and is trying to secure $10-12bn of extra aid by mid-April.

The nation has faced a cash crunch since abandoning a pegged exchange rate last month to float the lira.

Since then, the lira has declined around 30% against the dollar.

Short-term help

"We believe that something close to $10-$12bn of additional, short-term, immediate foreign support is necessary," said Mr Dervis from Washington.

We are quite confident that there will be a turnaround in the summer

Kemal Dervis

Investors indicated last week that their confidence in Turkey would only be restored once there was an offer of financial help from the West.

Mr Dervis also confirmed that he had positive discussion with US Treasury Secretary Paul O'Neill and that he was optimistic about securing the cash needed.

"I think it is truly in the interest of Turkey's partners and the international community to provide modest financing for the package."

Mr Dervis has vowed to press on with economic restructuring including reforms to the banking sector and faster privatisations, and is confident of seeing a turnaround by the summer.

Critical times

The financial crisis last month resulted from Turkey's inability to meet the demands of a three-year IMF deflation programme.

It was triggered when Prime Minister Bulent Ecevit and President Ahmet Necdet Sezer clashed publicly over the pace of an anti-corruption drive.

The government was forced to float the lira, which has fallen by about 30% against the US dollar, and inflation shot up again.

The IMF programme had previously cut inflation to 30% annually, compared with triple digit levels of the 1990s.