US embassy cable - 03ANKARA2419

UNCLAS ANKARA 002419 
 
SIPDIS 
 
 
SENSITIVE 
 
 
STATE FOR E, EB AND EUR/SE 
NSC FOR QUANRUD AND BRYZA 
TREASURY FOR OASIA - MILLS AND LEICHTER 
 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, PGOV, TU 
SUBJECT: TURKEY'S ECONOMY APRIL 14:  POSITIVE PUBLIC 
STATEMENTS BOOST MARKETS SLIGHTLY 
 
1.  (SBU) Positive statements by IMF and GOT officials over 
the weekend, combined with a lessening of anxiety over Iraq, 
gave Turkish markets a modest lift this morning.  The lira 
strengthened to TL 1,633,000/dollar, yields on the benchmark 
4/28/04 t-bill fell to 62.31 percent, and the stock market 
rose 3.71 percent in morning trading. 
 
 
2.   (SBU) Investors told us they were heartened by positive 
statements from the IMF and GOT officials, as well as by the 
relatively good news coming out of Iraq (eg. war winding 
down, relative calm in Northern Iraq).  The local press 
quoted IMF European Director Michael Deppler as saying he 
thought the Turkish Government was now fully committed to the 
reform program and that the Letter of Intent the Board would 
consider this week would put Turkey back "on track."  The 
press also reported Treasury Deputy U/S Ozyildiz's statement 
in Washington that the GOT would target a 7.7 percent primary 
surplus this year (including 1.2 percent from a partial 
spending freeze), as well as Central Bank Governor 
Serdengecti's statement that Turkey could still hit its 
inflation target and produce 3.6 percent growth this year. 
(Note:  Although 3.6 percent growth is lower than the 
official estimate, it is on the high side of the range many 
market analysts now say is likely.  End note) 
 
 
3.  (SBU) Senior Turkish politicians also weighed in with a 
positive, if less credible, message.  State Minister Babacan 
reportedly told the press that the government had minimized 
the impact of the Iraq war via sound economic measures, while 
Prime Minsiter Erdogan said Turkey would play a major role in 
Iraq's reconstruction.  Tourism Minister Aksit declared that 
Turkey expected 15 million tourists to visit this year, 
yielding $13 billion in revenue.  Finance Minister Unakitan 
announced that many foreign investors were interested in 
buying state tobacco and spirits producer Tekel, and that 
Turkey's Competition Authority would not object to the sale. 
 
 
4.  (SBU) The other positive factor in the markets is the 
absence of a significant domestic debt redemption this week 
(only a TL 500 trillion redemption). 
 
 
PEARSON