Turkey's stock market surges

Economy Minister Kemal Dervis got the money he wanted

The Turkish stock market rose 13.5% to a five-month-high on Friday after the country's economic reforms were rewarded with $10bn in outside support.

IMF's Horst Koehler backs Mr Dervis' reform plans

The International Monetary Fund (IMF) said it would help Turkey with a $10bn loan package following talks with the country's economy minister Kemal Dervis earlier this week.

Some details of the package, which will come in addition to previous loans, still have to be agreed.

"Turkey will make the very best use of this assistance," the country's prime minister Bulent Ecevit said.

Backing

The US treasury secretary Paul O'Neill backed the rescue package, as did financial market specialists.

"The loan will definitely cover Turkey's financing needs for 2001,"said Deutsche Bank Istanbul vice-president Oktay Sehsuvaroglu.

"It is definitely a lot more than expected," he added.

The $10bn will come in addition to $6.25bn left over from the last IMF loan and $5bn from a previous World Bank agreement.

The IMF will provide $8.5bn of the loan with the World Bank providing $1.5bn.

Economic reform

Mr Dervis last week announced controversial economic reform measures to shore up the Turkish economy.

They included banking reforms, a 10% cut in public spending and an acceleration of the government's privatisation programme.

Shares in Istanbul rose 13%

While popular with industry leaders, the proposals have been bitterly opposed by unions, which are seeking a more immediate solution to rising inflation and high unemployment.

IMF's managing directory Horst Koehler, said the international loan-making agency's board of directors had "expressed strong support" for Turkey's new economic programme.

"The fact that Koehler has stepped in and that the IMF has taken a positive stance gives us hope," said Mr Ecevit.

Recession

The IMF on Thursday revealed that, thanks to the financial crisis, it expects the Turkish economy to contract by 2.6% this year.

Energy minister Cumhur Ersumer resigned

"The situation remains difficult," the IMF said in its latest World Economic Outlook report.

But the IMF said the country's economy would return to growth, of 4.9%, next year.

Inflation, which hit 54.9% last year, will come in at 48.4% this year, and 28.4% in 2002.

Political turbulence

The announcement of the rescue package took much attention away from a high-level resignation on Friday.

Energy minister Cumhur Ersumer resigned following corruption allegations against his department in connection with energy tenders dubbed "Operation White Energy".

A prosecutor charged 15 people with corruption.

Mr Ersumer was not questioned by the prosecutor because of his ministerial immunity.

Mr Ersumer was criticised for not dealing with corruption within his department, but he has not himself been charged with corruption.

On Monday, the European Union's enlargement commissioner, Guenter Verheugen will visit Turkey to discuss the country's progress towards meeting the EU accession criteria.