ANKARA, Turkey — Turkey's economy minister Saturday warned of more hardships as he announced an austerity program that called for cuts in government spending, a cap on hiring and reforms of the ailing banking system.
Some 10,000 protesters took to the streets in Istanbul Saturday, demanding that the government resign amid economic chaos that has led to mass layoffs and rising prices.
The release of Kemal Dervis' economic program comes some eight weeks after the Turkish lira began to plummet, falling some 40 percent against the dollar and triggering skyrocketing interest rates, business failures and some 500,000 layoffs.
"We will all tighten our belts," Dervis said. "We won't be in a better situation in the next three months. Compromises are required, but there is no need to be pessimistic."
Observers say that with the political opposition in disarray, Turks might have little choice but to back the austerity measures.
"Even if it is not good, we have to accept this program and everyone has to support it," said Sarik Tara, head of ENKA Holding Co., one of Turkey's largest construction companies. "Turkey's emergence (from the crisis) requires solidarity."
Dervis said Turkey will slash government spending by 9 percent and freeze public hiring, except in the fields of health, education and security.
Salary raises for public-sector employees will be limited to the inflation rate.
Turkey's economy will likely shrink by 3 percent this year, Dervis said, but grow by 5 percent in 2002.
Inflation is expected to reach 57.6 percent this year but is forecast to drop to 16.6 percent in 2002, Dervis said. State banks, which have accumulated $20 billion in bad loans, will be reformed, branches will be closed and workers will be offered retirement packages.
International lenders such as the World Bank and International Monetary Fund have been calling on Turkey for years to carry out such austerity measures.
Dervis said Turkey needs $10 billion to $12 billion in foreign support, adding that by next week it should be clear how much money Turkey will receive.
The program does not address some key issues, such as a target exchange rate with the dollar, and Dervis said additional economic details would be released in the coming days.
Prime Minister Bulent Ecevit pledged his government's support for the program. Dervis called two weeks ago on the government to pass 15 key economic laws before Sunday, but had to push that target date back three weeks. The government has only passed two of the laws, and many analysts have questioned whether the government has the will to carry out harsh economic measures that may alienate key constituencies
"We're supporting this program sincerely and with determination," Ecevit said. "Long years of grave economic and social problems can be overcome with the solidarity and sacrifice of our people."
But many people are angry at the cutbacks and blame government corruption for the economic turmoil.
In Istanbul, protesters chanted "Resignation!" and "Dervis Go Home!" as hundreds of policemen stood watch. Dervis had been working in Washington as a vice president at the World Bank before he was asked to return to Turkey to help manage the economic crisis.
Officials banned demonstrations in Ankara and 20 other provinces after some 200 people were injured in clashes at a Wednesday demonstration in the capital.
"What is in the program: price hikes, price hikes, price hikes," said Enver Civelek, a taxi driver in Ankara. "I can smell more hardships."
"Everything is upside down," said Abdullatif Sener, a lawmaker for the opposition Islamic Virtue Party. "The shrinking of the economy means unemployment, it means poverty. He is basically saying we will continue to destroy the small businesses, the civil servants, the retirees."
Opposition parties, however, have been tainted with charges of corruption and past scandals, and have been unable to rally support against the government.