Economy in Turkey: The meltdown in KKM accounts continues

The total amount in Exchange Rate Protected Deposit (KKM) accounts has decreased to less than 2 trillion 900 billion liras. The former economic management had lowered interest rates despite high inflation, leading to further increases in inflation and a surge in foreign exchange. The management had resorted to non-market methods to curb the rise in foreign exchange rates, one of which was the KKM.

In this practice, account holders are paid interest as well as exchange rate differences, which are covered by the budget. Former Chief Economist of the Central Bank, Prof. Dr. Hakan Kara, had reported that the total burden of KKM on the government’s budget was 181.5 billion liras, in 2022.

The new economic management has been recently making efforts to reduce KKM assets, supporting TL deposits. While the total amount in KKM accounts generally increases every week, it has been declining since the week of August 18.

According to the data from the Banking Regulation and Supervision Agency, the total amount in KKM accounts was 3 trillion 407 billion 948 million liras in the week of August 18, and this amount decreased to 2 trillion 921 billion 667 million liras in the week of November 3. As of the week of November 10, the money in KKM has further declined to 2 trillion 838 billion 788 million liras.