Turkey will have to revise upwards its target of reducing inflation to 12 percent in 2001 from 39 percent last year, junior Trade Minister Tunca Toskay told the Anatolia news agency on Friday.
His remarks were the first reference to a specific economic adjustment since Turkey cut the lira loose from the dollar in an effective devaluation on Thursday, thereby shattering the backbone of an IMF-backed anti-inflation program.
"We will have to revise our inflation targets," he said after a meeting with the IMF representative for Turkey, Carlo Cottarelli, but did not signal a new target figure.
The details of the new inflation figures would not be available for a few days, he said.
Meanwhile the finance ministry announced that public sector spending would be strictly controlled in the interests of budget discipline.
Turkey had aimed to reduce inflation last year to 25.0 percent and actually achieved 39.0 percent, from inflation of 68.8 percent in 1999. The target for this year was 12 percent and for 2002 five percent.
But analysts say those targets are now history and some estimate that the lira will eventually show a general depreciation of about 30 percent and that inflation will be about 40 percent at the end of 2001.
The government and the central bank have acknowledged that the financial crisis and slump of the lira mean that Turkey must draft a new economic strategy.
The lira was showing an overall depreciation of 21.3 percent on Friday, having rebounded from a fall of 30.5 percent on Thursday, and Toskay said he expected it to stand at a "more realistic" rate in the next few days.
The dollar was being quoted at 874,995 lira from 991,660 late on Thursday and 689,000 lira on Wednesday before the pegged link between the lira and dollar was cut -- ANKARA (AFP)
