Turkey on track for IMF tax reform, target
Orhan Coskun, ANKARA, Sept 24 (Reuters) - Turkey is on track to meet a key pledge to the International Monetary Fund on overhauling its tax system before the fund agrees to release a latest loan tranche, Finance Minister Sumer Oral told Reuters on Tuesday.

Political wrangling ahead of an early general election on November 3 has delayed some elements of the tax reform package. The election has also raised concerns government spending could damage tight budget targets agreed with the IMF in return for a $16 billion loan package aimed at helping Turkey manage a debt load swollen by last year's financial crisis.

The IMF's executive board is due to announce its decision to release a $1.6 billion loan tranche after a fourth review of the programme that begins when Economy Minister Masum Turker leads a delegation to Washington this week. The delegation includes the central bank governor and treasury undersecretary.

IMF inspectors are expected to review Ankara's progress during a visit in the second half of next month.

Oral told Reuters there were no problems with a plan to end extra-budgetary funds for ministries, despite opposition from far-right Nationalist Action Party (MHP) ministers.

Turkey was to announce it was phasing out the direct transfer of Special Consumption Tax revenues to ministries at the end of August. MHP cabinet ministers said last week they would not sign such a directive which is intended to improve controls on government spending.

"No problems remain with the signing of the directive on the Special Consumption Tax," Oral said in a telephone interview.

"Our work is continuing on the tax package we will give to parliament in October. There will be no delay in the tax package's pre-announced schedule," he said.

AIM TO RATIONALISE TAX SYSTEM
The IMF programme also aims to rationalise the complex and inefficient tax system by bringing together 16 different taxes, levies and duties under a single tax, aimed at making revenue easier and cheaper to collect.

The government has also promised to cut another 12,000 public sector jobs in a bid to boost state revenue by the end of the month, but that now appears unlikely ahead of the polls.

Economy Minister Turker said political uncertainty could slow down implementing IMF pledges, but insisted he did not see problems arising as a result.

"There are pledges that will not be fulfilled both because of elections and parliament being adjourned. But this is not a problem," Turker told reporters after a speech at an Ankara university on Tuesday.

"We will talk with the IMF. We tell the truth and within that realistic framework some of the pledges will be pushed to the next period," he said.

Oral said none of the government's recent spending measures ahead of the election would endanger IMF-backed macroeconomic targets and a stringent budget.

"There has been no implementation because of the election that would hit the programme's targets. We will continue to move ahead with implementation according to the programme's goals."

The government agreed with public sector labour unions last week to a monthly wage increase of 100 million lira ($60), but said the hike would not undermine budgetary constraints. Other pledges not yet met in the IMF accord include banking sector reforms and selling off state enterprises.

Pending lawsuits against the banking watchdog's seizure of three banks have delayed Turkey's promise to rehabilitate and sell or close insolvent institutions taken into receivership.

Another outstanding pledge is a "prior action," one of the IMF's stiffest conditions, that Turkey will present a plan to privatise state beverages and tobacco firm Tekel.

Kraft Foods Acquires Turkish Snacks Company
NORTHFIELD, Illinois, Sept. 20, 2002--Kraft Foods Inc. (NYSE:KFT), a global leader in branded foods and beverages, announced today that its international business has completed the acquisition of the shares of the Kar Gida snacks company in Turkey.

Terms of the acquisition were not disclosed. The transaction has received all necessary regulatory approvals.

Kar Gida has a strong position in the Turkish salted snacks market and its portfolio of brands comprises well-known potato and corn chips such as Cipso, Pekos, Patos, Critos and Cerezos.

"This is part of Kraft's strategy to rapidly expand our food portfolio in high growth developing markets and we are delighted to grow our presence in a country we consider key to our growth for the region," said Maurizio Calenti, President of Kraft's Central and Eastern Europe, Middle East and Africa region. "This business will significantly increase our scale in Turkey by complementing our existing beverage and chocolate portfolio with strong salted snacks brands," continued Calenti.

The Kar Gida company was previously owned by the Kar Group of Companies, a privately owned conglomerate of companies which span financial and recreational services, food, agriculture, aviation, tourism and construction. In 2001, Kar Gida's revenues were approximately $35 million, and has approximately 500 employees at its Istanbul plant and in several regional offices throughout Turkey.

Kraft Foods operates in Turkey through its wholly owned subsidiary, Kraft Foods Turkey, which markets and sells a number of brands such as Milka chocolate, Jacobs coffee and Tang powdered beverages. Through its minority-owned company, Marsa, the company sells margarines and edible oils under the brands Evin, Luna, Huner and Ona.

Kraft Foods is the largest branded food and beverage company headquartered in the United States and the second largest worldwide. Kraft Foods markets many of the world's leading food brands, including Kraft cheese, Jacobs and Maxwell House coffees, Nabisco cookies and crackers, Philadelphia cream cheese, Oscar Mayer meats, Post cereals and Milka chocolates, in more than 145 countries.