Commenting on BDDK decision prominent economy professor says bread will be 10 TL

Prof. Dr. ÖZGÜR DEMİRTAŞ has noted that the BDDK decision will have serious consequences. Regarding the decision he said “There are no pros and it is cons from top to bottom. If the decisions taken for 10 years had been correct, the bread would not have been 5 TL. I’m telling you, the bread will be 10 TL.”

According to most recent BDDK decision “Loans will NOT be given to companies with foreign currency over 900 thousand dollars. If the amount of foreign currency on the balance sheet exceeds 15 million TL, companies will not be able to use cash TL commercial loans from banks if their foreign currency assets are more than 10 percent of their assets or annual income.” This decision is likely to have very serious consequences.” Regarding the issue, Prof. Dr. Özgür Demirtaş shared a new video on his Youtube channel with 1.26 million followers. Down below are some excerpts translated from the post shared by Mr. DEMİRTAŞ.

Demirtas made the following evaluations in summary:

“Although the decisions taken by the BRSA are decisions that concern companies, they also concern people one-on-one. I think we’ve entered an incredible period.

The BDDK said in its latest decision, “companies in Turkey, if you keep more than 900 thousand dollars in your account, then I forbid you use a loan, to get a loan.” That’s what it means, ‘do not keep more than 900 thousand dollars in foreign currency, you must change it into TL’, that is what it means. This does not bring a plus, from top to bottom it is negative…“

“In Turkey, companies need a bank loan to carry out their daily activities. Therefore, this event engages most companies. The amount is also quite low for companies. It is too low for medium-sized companies.”

‘COMPANIES WILL SWITCH TO KKM, THE LOSS WILL GROW’

“We know that this rule issued by the BDDK says to companies; ‘We need dollars to keep dollars/TL rate under control. Therefore, if you have more than 900 thousand dollars in foreign currency and you want to use a loan, you will sell those extra dollars.

So what are companies going to do, they have to use credit. Then they’ll make this sale. And what will most likely happen from Monday? Some of the companies will distort their dollars and extra parts and switch to currency-protected deposits (KKM).

Therefore, when you tell the companies to sell their dollars above 900 thousand dollars and force them by not providing access to loans, of course they will be obliged to do it.

Perhaps there will be a short decrease in the dollar /TL, but the loss on the currency-protected deposit will grow more and more.”

‘THE MONEY WILL GO ABROAD’

“There’s more to it. Abroad, they will maybe start another company. One of our biggest problems as Turkey is that the money is escaping abroad. We want to attract/bring the money back to Turkey. But some companies will see that there is no trust here. Then they will start a company abroad, their own company will buy goods from those companies. Thus we’ll have caused those dollars to go abroad.”

DOLLARS WILL BE ORIENTED TO PERSONAL ACCOUNTS

“What some companies will do is for instance there is an amount of $ 3 million. After this decision 900 thousand dollars, they will say, at least we can distribute this money to our shareholders in dividends etc. Then these people will be keeping these dollars in their personal accounts. What will happen, then? Is this the solution? Then, shall we will make a decision instructing ‘it is forbidden to draw dividends?’ Why would people start a company, if it’s forbidden?”

‘REVIEW THIS DECISION ONCE AGAIN’

“I ask the regulators once again. Review this decision one more time. This decision is not in the interests of Turkey. This decision seems to be a decision made to keep the dollar/TL under control in the short term. This decision is not a healthy one. It’s not a mathematically correct decision. It’s not optimal.

Look, if the decisions taken for 10 years were decisions in the interests of Turkey, would the TL lose so much value? Would the interest go up that much? Would inflation increase this much? Would a loaf of bread be 5 TL? I’m telling you it will be 10 TL. So those decisions were wrong, and this decision is wrong.”