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Friday, 30 March, 2001, 17:32 GMT 18:32 UK
Turkey's economic plan suffers blow
Economy Minister Kemal Dervis
Mr Dervis' economic programme is blown off course
Turkey has abandoned the privatisation of its national carrier, Turkish Airlines, in a major setback for its economic reform programme.

The government's plan to sell 51% of its national airline was scuppered after it failed to attract any final offers for the company.

The tender related to the privatisation of Turkish Airlines has been cancelled because of no bids being received

Turkey's Privatisation Administration
"The tender related to the privatisation of Turkish Airlines has been cancelled because of no bids being received," said Turkey's Privatisation Administration board.

Nine investors had shown initial interest, but did not follow up with a formal bid.

The government had hoped to complete the sale in April, after extending the deadline by one month to March 30.

Major setback

Earlier this month, Turkey's newly installed economy minister Kemal Dervis unveiled emergency measures to kick-start the country's ailing economy, including a plan to speed the privatisation of state companies.

The country's agreement with the International Monetary Fund also requires it to fast-track privatisation of national companies.

A sale of Turkish Airlines would have generated vital funds for the government, which says it needs $10-12m of additional foreign aid to weather its economic crisis.

The Turkish privatisation board owns 98.17% of Turkish Airlines, and the rest is traded on the Istanbul stock exchange.

Analysts had said earlier this year that the company's debt load of $1.9bn would have made it difficult for the government to find a buyer willing to pay a lot.

Next step

The government made no comment on Thursday as to how it would proceed following the failed sale.

Mr Dervis is also working on a plan to sell 51% of the national phone company, Turk Telecom.

Turkish officials have said they expect the company to be worth at least $10bn based on 1998 research by Goldman Sachs.

But it is likely that the global downturn in telecom stocks will make it more difficult for Turkey to attract buyers.

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