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... itiveness with a view to achieving sustainable economic growth, in particular through development of the private sector. - Strengthening the socio-economic balance: the aim is to alleviate the short term costs of economic transition through appropriate measures in the field of social policy regional co-operation: the aim is to complement bilateral activities through measures to increase exchanges at the regional level. Despite the period of economic stagnation in 1998 and 1999, Turkey ranks as a country with sustained growth prospects. An especially positive factor is the new situation of political stability following the change of government. Blend Ecevit's package of reforms has now been initiated. The three coalition parties have demonstrated that they can work together well.
The agreement between Turkey and the IMF is particularly advantageous. According to News Brief No. 99 / 76 dated 23 November 1999, Turkey has received US$ 11. 5 billion until today and IMF is still supporting the stabilization program of Turkey. Turkey's economic position has also been bolstered by its acceptance as an official candidate for EU entry. The decision to lower and / or abolish customs duties has significantly improved the country's external trade.
Also the geopolitical location of Turkey is an undeniable advantage for external trade. The subjects should have been focused on: - Co-ordination of economic policy and exchanges of information and opinions on interactions between wage developments and monetary, budget and fiscal policy through the framework of a macro-economic dialogue aimed at preserving a non-inflationary growth dynamic; - Further development and better implementation of the co-ordinated employment strategy to improve the efficiency of the labour markets by improving employability, entrepreneurship, adaptability of businesses and their employees, and equal opportunities for men and women in finding gainful employment, respecting, at the same time, the autonomy of the various concerned actors in their respective areas of responsibility; - Comprehensive structural reform and modernisation to improve the innovative capacity and efficiency of the labour markets and the markets in goods, services and capital. Taking into consideration the effects of high inflation and interest rates on Turkeys economic performance over the last 25 years, the government focused on an economic program which aims to free the country from inflation and enhance the prospects for growth and for a better standard of living for all parts of society. Thus, a disinflation and fiscal adjustment program was initiated on December 22, 1999 supported by a stand-by arrangement (SBA) with the International Monetary Fund. In view the arrangement, the inflation target for the year 2000 is, lowering the 12 -month current price index (CPI) inflation rate to 25 percent and wholesale price index (WPI) inflation to 20 percent by end-December 2000. These inflation targets for 2000 also provide a good starting point for lowering both WPI and CPI inflation to 1012 percent by end- 2001, and finally to move to lower single digits (about 57 percent) by end- 2002.
The program rests on three pillars: Up-front fiscal adjustment, structural reform, a firm exchange rate commitment supported by consistent incomes policies. Up-front fiscal adjustment is necessary because the weakness of public accounts is the ultimate factor behind high inflation. Structural reform is needed to make the fiscal adjustment sustainable, improve economic efficiency, and, through increased privatization receipts, facilitate the decline of public debt. A firm exchange rate commitment and consistent income policies are needed to lead inflation and interest rates down more rapidly, particularly in the first phase of disinflation. The strength of the program enhances the credibility of disinflation goals, and will in this way make it possible to achieve disinflation and growth at the same time. Thus, while the primary fiscal position of the public sector will be tightened, growth will be spurred by increased confidence related to the; decline in inflation, the expected fall in real interest rates, the revitalization of the private credit market, sizeable interest payments that will continue to accrue to the private sector on the stock of public debt in circulation, the improvement in the external economic environment, as economic recovery is expected to strengthen in Europe and tourism receipts return to more normal levels.
In line with the measures, GNP growth in the range of 55 percent in 2000, partly reflecting the rebound from the negative growth in 1999 is projected. GNP growth is expected to remain in the range of 5. 6 percent in 200102. As economic activity picks up, the external current account deficit is projected to increase from percent of GNP in 1999, to 1 - 2 percent of GNP in 2000, with deficits of the same order of magnitude expected in 2001 and 2002. The performance of the program is measured through reviews made every three months in the first year and twice in the following years. Significant progress has been made towards achieving the programs goals. Following the second review, progress in the implementation of the undertakings have become more apparent: - inflation in the first five months of 2000 fell to the lowest level since 1986, - the public debt-to-GNP ratio is falling, - interest rates have declined rapidly, - output growth is resuming, - industrial production accelerated sharply in the first four months of 2000, - in the first 5 months of 2000, production has increased by 3. 3 % in manufacturing, 9. 2 % in the electricity, gas and water sectors and decreased by 2. 9 % in the mining sector compared to the 5 month averages of the previous year. - fiscal performance in the first quarter of 2000 has been strong.
The floor on the primary surplus of the consolidated government sector was met by a good margin - due to rigorous implementation of monetary and exchange rate policies in the first few months of 2000, the end-March performance criteria for net domestic assets and net international reserves of the central bank were met. - a protocol for consolidation of the debts and receivables of State Economic Enterprises in the energy sector has been put in effect. - progress is made in the improvement the public finance administration and ensuring its transparency. - there has been successful progress in efforts to reach the privatization target of USD 7, 6 billion in 2000. These results have been achieved through the strict implementation of the policies, which have garnered credibility in both domestic and international financial markets, as also reflected in upgrades by major credit rating agencies. The Credit Agency Moody's, has announced that the credit note of Turkey will be reviewed with a possible upgrade.
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