ISTANBUL A $4 billion plan to swiftly inject capital into Turkey's crisis-hit banking sector is designed to stave off domestic debt payment problems that might provoke further financial turmoil, analysts said on Friday.

It was not immediately clear if the move was approved by the IMF, which supports Turkey with $19 billion in crisis lending, and whether or not the cash would come out of $10 billion in new cash the fund is expected to approve in January.

"The speed at which they want to push this thing through is so that the government can fund its debt burden," said Sheetal Radia, economist at Standard and Poors MMS in London.

Analysts said the World Bank and bilateral lenders such as the United States might also provide the required capital, or Turkey may attempt to borrow the cash on international markets.

Without adequate capital local banks, the major buyers of Turkish debt, will struggle to help Turkey service its huge domestic debt load through purchases at regular auctions the treasury holds, Reuters quoted analysts as saying.

Turkey had originally made an IMF-backed request for all banks to raise their own capital adequacy ratios to acceptable limits by the end of the year or face possible closure.

The head of Turkey's banking watchdog Engin Akcakoca told reporters on Friday the money, to help raise capital adequacy ratios to some eight percent, would come from foreign sources but would not elaborate.

"The financing, which is to arrive at the treasury, should be a foreign resource," Akcakoca told reporters in Ankara saying the capital injection to banks must be performed just once, be a temporary measure and be applied decisively.

Ankara has still to regain the full confidence of investors cautiously eyeing a costly domestic debt load standing at 117,245 trillion lira (around $79 billion) as of the end of November, and a foreign debt stock of $118.8 billion.

Domestic debt has shown more than a four-fold increase on a year-ago, before crisis forced turkey to issue billions of dollars of new debt to bail out its sinking banking system.

Unfair Competition?

Local bankers said the capital was essential to help Turkish industry recover from its worst economic crisis since 1945, but it may upset foreign banks like HSBC who are investing their own capital in local banks they have purchased.

"It seems like unfair competition but currently the major thing must be the viability of the Turkish banking system," said one Istanbul banker, who asked not to be named. "In order to bring any growth you have to help the banking sector."

The IMF is expected to approve an additional $10 billion in aid as early as January provided Turkey holds to conditions set out in its standby accord and passes key laws in privatization and public procurement.