Turkey passes tight 2002 budget

Turkey's hopes of new loans from the International Monetary Fund (IMF) have been boosted after its parliament passed the country's 2002 budget.

Turkey needs the IMF's money to help it sort out its domestic debt problems and lift the country out of its worst recession since 1945.

To that end, it has promised the IMF that it will slash spending and raise revenue.

Ankara is ready to reform the country's tax system and improve spending management - although the plans are controversial even within the government.

Tight budget

The 550-seat assembly voted 294 to 100 in favour of the budget

The 2002 budget puts tight controls on state spending, particularly wages for state employees and aims to slash inflation to just over 30% by the end of next year from its current level of 84.5%.

The measures should help boost growth to 4% in 2002, compared to a sharp fall in output this year when the economy is expected to shrink by 8.5%.

Turkey's budget deficit should also fall, to below 10% of the country's gross national product (GNP), while public sector revenues before debt payment should reach 6.5% of GNP.

IMF watches closely

Turkey's budget debates are closely watched by an IMF delegation which is currently in Turkey.

Both Ankara and the Fund are in talks to finalise conditions on a fresh $10bn (£7bn) loan this week.

The loan would come in addition to a $19bn rescue package granted by the IMF earlier this year.

Turkey's stock market rose on the news that the budget was approved amidst high hopes that the government's negotiations with the IMF are about to completed.

IMF officials said earlier that the country is starting to climb out of its disastrous recession and the government is ready to set in motion the Fund's proposed reforms of the banking sector, along with widespread structural and fiscal reforms.