Turks to tighten their belts: Ciller imposes a bold austerity plan and slashes value of currency

TURKEY'S Prime Minister, Tansu Ciller, unveiled the country's most radical reform and stabilisation package since 1980 yesterday, ordering the sale or closure of dozens of public companies, a wave of price increases, a freeze on wages and the effective devaluation of the currency by another 38 per cent.

Mrs Ciller gambled that a bold warning of a financial meltdown would carry the long-suffering Turks with her through what she admitted would be a harsh period of austerity. Most Turks appeared willing to give their discredited government one more chance, if only because they have little choice. The economy has been shaken by turbulence since January, with sky- high interest rates freezing last year's 7.4 per cent growth of GNP in its tracks and the Turkish lira losing more than half of its value.

Many worry that a surge of votes for the pro-Islamic Welfare Party in municipal elections last month showed that if the conservative Mrs Ciller fails, worse political options may be in store. 'Let's help Ciller,' said Rauf Tamer, a usually merciless commentator for the daily newspaper Hurriyet. 'There's no other way. For a while, I am going to stand with her and call on everyone else to do so as well. I do not want to hear later that if we had only helped her, she would have succeeded.'

Workers' demonstrations broke out on the news that their loss-making, overstaffed factories would be closed. But after years of talk, many knew they had it coming. The protests were more sombre than angry. The country seems to understand the price being paid for the heady consumption-and debt-led growth sponsored by the late President Turgut Ozal.

Mrs Ciller painted a bleak picture of the economy. Tax revenues in 1993 no longer covered interest and capital repayments on Turkey's debt, she said. Real public sector wages had tripled since 1988, the balance of payments was off the graph and the budget deficit was running at an estimated 16.3 per cent of GNP in 1993.

'We may have hyperinflation and stagnation if no measures are taken . . . some Latin American states represent perfect examples of what may happen,' Mrs Ciller told a televised news conference in the best and gutsiest performance of her shaky nine- month premiership.

To close the immediate budget gap, Mrs Ciller announced price rises of between 50 and 100 per cent for many products from telephones to state-imported whisky. More important was a range of reforms in how the Turkish state goes about its business.

The Central Bank yesterday even gave up trying to fix the exchange rate, deciding instead to acknowledge the real indicator of the lira's value, the Turkish interbank market. It acknowledged the market rate of 31,000 to the dollar, down from 23,000 two days before.