The tragic events of 11 September hit Turkey particularly hard because of the country's location, its reliance on tourism and its heavy indebtedness

Horst Koehler IMF

In his statement, Mr Dervis said efforts to solve Turkey's funding gap "will be discussed and finalised with international financial institutions in the coming days".

The IMF team will arrive "in the near future", the economy minister said.

IMF praise

Trade unionists and employers, under the banner of the "Civilian Initiative" have warned Ankara that the IMF-sponsored economic programme is "failing".

IMF managing director Horst Koehler on Monday praised Turkey's efforts to tackle its difficulties.

"Turkey's economic program has been on track," Mr Koehler said in a statement.

"(But) the tragic events of 11 September hit Turkey particularly hard because of the country's location, its reliance on tourism and its heavy indebtedness," he said.

The current economic programme is moving towards failure

Turkish Civilian Initiative

Any decision to provide more loans rests with the US Treasury, which had hoped not to lend Turkey any more after the last loan in May.

Earlier this month a US official said Turkey's economy was "under extensive study" to assess the impact of 11 September and noted the Bush administration views it as "a good friend and ally".

The IMF has twice bailed out Turkey in the past year, increasing total lending by $15.7bn with loans in December and May.

Backlash

Turkish unionists and employers on Monday criticized the IMF-backed programme and urged Ankara to do more to end the economic crisis.

"The current economic programme is moving towards failure," said the country's biggest labour unions with two influential business groups in a joint statement.

"Measures encouraging investment, production and exports must be introduced," the statement said.

It also called for incentives to increase jobs and improve social welfare for the estimated 700,000 people who have been made unemployed since February.

Economic woes

The Turkish economy was plunged into crisis in February when foreign investors pulled out of the country after a political spat between the president and prime minister.

Turkey's currency lost half its value

The government was forced to abandon the lira's peg against the US dollar, cutting its value by 50%.

Turkey has been struggling to implement the IMF-backed economic programme because of the high interest on its domestic debt.

Official government figures predict the economy may contract by 8.5% in 2001, the worst recession since 1945.

After the economy minister's statement, the Istanbul National-100 index closed the day 0.04% higher at 9,919.8.