Turkey is in a much better position than it was one or one and a half years ago

IMF

"Macroeconomic and financial stability is the first prerequisite for growth," he said.

But, he added, "looking ahead, this achievement needs to be completed by a return to positive economic growth".

Sacked

The relatively positive comments came after the government on Tuesday sacked its privatisation chief Ugar Bayar.

Mr Bayar was dismissed after reportedly disagreeing with the state minister who oversees privatisation, Yilmaz Karakoyunlu.

The two are said to have clashed over investment plans for Turkish Airlines, which is due to be privatised under Turkey's agreement with the IMF.

There were also reports in some Turkish papers that highlighted the fact that Mr Bayar's brother had decided to leave a diplomatic post to head a political party expected to be a direct rival to Mr Karakoyunlu's Motherland Party.

Observers said that while Mr Bayar's sacking might cause delays to Turkey's programme of state company sell-offs, it was unlikely to derail the overall strategy.

Growth hopes

Mr Brekk said he was "hopeful that the three percent target for gross national product growth in 2002 is reachable", even though there have been few signs of economic growth in Turkey so far this year.

Some observers feared the prospects of US military action against Turkish neighbour Iraq could hit the tourism industry, which is a vital source of foreign currency earnings.

But Mr Brekk insisted that "with a better government budget position and a more healthy banking system, combined with the floating exchange rate, Turkey is now in a much better position than it was one or one and a half years ago to prevent any external or domestic disturbance from developing into a full-scale crisis".

No problem

The IMF is to meet on 15 April to consider the pay-out of a $1.1bn loan tranche.

The road to Turkey's latest IMF programme began in February 2001 when a devastating financial crisis forced it to devalue its currency, the lira.

The lira plunged by almost 50%, inflation soared by about 80%, and hundreds of thousands lost their jobs, plunging Turkey into its worst recession in 50 years.

The financial crisis lingered for months, bringing the country's gross national product down by 9.4%.

In the end, the IMF stepped in with $12bn in fresh, though conditional, loans along with the release of $4bn of frozen loans.

Conditions

Among the IMF's conditions was the demand that Turkey's politicians would grant its regulatory bodies and state banks greater independence.

"Against this background we believe that the government must resist any temptation to stray from the basic strategy to deal with the short term problems," Mr Brekk said.

Last month, Prime Minister Bulent Ecevit caused concern when he suggested the government would seek to regain some economic powers in a bid to fund quick economic expansion.