Turkey could see job cuts, higher taxes

ISTANBUL, Turkey -- Turkey's government said Wednesday it would cut public sector jobs and keep taxes high, as it implements an austerity plan that has won backing from the International Monetary Fund.

The plan, based on spending cuts, tax hikes and privatization, aims to end a yearlong crisis that has cost 1.5 million jobs. Its implementation will mean another tough year for most Turks in 2002, ministers have warned.

The government has already said 15,000 public sector workers will take voluntary early retirement, and it will double this number in the near future, State Minister Recep Onal told reporters. He said nobody would be forced to retire.

The statement came after the IMF approved a new $16 billion loan deal to back the program earlier this week, making Turkey the world's biggest recipient of IMF funds with a total of $31 billion. Analysts say that represents about a third of the fund's total lending, and the biggest outlay in its history in weighted terms.

Turkey promised the IMF it would reduce public sector overstaffing by two-thirds by October, and remove all remaining surplus workers by June 2003.

Tightening belt

That will mean 50,000 public sector job cuts this year and another 25,000 in the first half of 2003, the daily Cumhuriyet said Wednesday.

"It'll be the tightest belt in our history," wrote Cumhuriyet columnist Yalcin Dogan, warning that the IMF-backed program would bring layoffs, new taxes, price rises and declining investment.

The government's letter to the IMF said the cuts would be made "through voluntary retirement offers, and layoffs only when necessary."

The government also promised to achieve a primary budget surplus of 6.5 percent of GNP. Finance Minister Sumer Oral said Wednesday the government would meet some of this through higher taxes on gasoline, natural gas and real estate.

"We can't compromise on the program's financing targets in 2002," Oral said.

The IMF-backed program aims to bring down inflation from its current level of around 90 percent to some 12 percent over the program's three years. It will also seek to reduce Turkey's heavy debt burden and enable sustainable growth. Turkey's economy shrank around 8.5 percent last year. The program predicts 3 percent growth this year.