The government's economic credibility was dealt a blow by the resignation of treasury head Mahfi Egilmez on 5 December in protest at plans for a public sector price freeze in January-June 1998. On 7 December, Yener Dincmen, general manager of state-owned Ziraat Bankasi, was appointed as the replacement for Egilmez. Dincmen himself was replaced by the transfer of Selcuk Demiralp from state trade institution Turk Eximbank.

Dincmen pledged that the government's anti-inflation struggle will continue. The 1998 budget, due to be debated in parliament between 16-25 December, aims to lower wholesale annualised inflation to 50 per cent from about 88 per cent expected at the end of 1997. However, Egilmez's loss is a major setback to the government's current bid for IMF support, economists say. He was highly regarded by the IMF, the World Bank and in the international financial community, the economists add.

Besides the planned state-sector price clampdown, Egilmez was a stern critic of agricultural subsidies, low minimum retirement ages, and ambitious infrastructure schemes. He also reportedly opposed talks with the IMF on the grounds that failure to win the organisation's support would send negative signals to the international lending markets.