Opposition leader: Turkey has never encountered such an economic destruction, before
Opposition leader KILICDAROGLU has sent very powerful criticism messages to the government about the financial difficulties Turkey has been experiencing. He said following in regards;
“While the markets were closed over the weekend, decisions were announced under the assumption of the caravan sets off on the road. These rushed decisions certainly have reasons behind them. They are attempting to carry water to the dried-up water well through convoluted paths to avoid saying “we’re out of water, work is done.”
The Central Bank of the Republic of Turkey (CBRT), on one hand, is trying to camouflage the dwindling foreign exchange reserves of banks by increasing their foreign exchange required reserves. On the other hand, it’s attempting to lighten the burden of the Currency Indexed (protected) Deposits (CID), which were left at its doorstep by manipulating banks’ securities.
WE NEED 706 BILLION TL TO SAY SAFE IS EMPTY
The figures are clear… As of August 17th, the “CBRT net foreign exchange position deficit (including SWAP)” is $61 billion. To say “the safe is empty (zero cash)” there is a need for $61 billion. The yet-to-be-realized exchange rate loss on the CBRT’s balance sheet amounts to 706 billion Turkish liras.
Again, as of August 17th, CBRT’s loss primarily stemming from the CID is 565 billion Turkish liras. Moreover, the 152 billion liras paid by the Treasury for the CID since last year adds to this. This country has never before encountered such an economic destruction and genocide.
CID PRACTICE HAS TURNED INTO A MASSIVE BLACK HOLE
The CID practice, which they claimed would not burden the Treasury even in the worst scenario, has turned into a massive black hole that absorbs the country’s resources. The high inflation they caused has completely destroyed the Turkish lira’s function as a store of value. The CID has intensified dollarization to extremely high levels.
We previously predicted that these would happen. We warned the “Palace Government” many times. We presented how to overcome these problems in the “Joint Policy Consensus Text.” We are not happy to be proven right at this point. We will all pay this heavy burden of 85 million people together.
These problems cannot be solved with piece-by-piece decisions instead of a comprehensive program. The CID cannot be liquidated this way. Fragmented decisions can further unsettle both citizens and markets. While trying to cure things, they could make it worse.
With the recent decisions made by the CBRT, either banks will significantly increase deposit interest rates, or in a high inflation environment, people will rush to foreign currency from the CID. So, how will this be covered when there are no foreign exchange reserves?
In the upcoming year, there is $206 billion of external debt to be refinanced. The external debt the Treasury will pay in the next four months alone is $4.5 billion. However, on the other hand, our country’s foreign exchange position deficit has skyrocketed.
WE NEED A PROGRAM TO RADIATE CONFIDENCE IN OUR CTIZENS AND MARKETS
Announce a program that will instill confidence in our citizens and markets immediately. The Medium-Term Program that you will announce in September is an important opportunity in this framework. Establish a consistent macro prudential framework that will instill confidence with sound monetary and fiscal policies.
With this program, publicly disclose the roadmap of how you will exit the CID in the medium term. If you truly want to reduce dollarization and the country’s risk premium, you must definitely do what I have said. Otherwise, you will bear a very heavy burden before the nation and history.
Source: birgun.net/haber/kilicdaroglundan-mbnin-yeni-kararina-tepki-kkm-bu-sekilde-tasfiye-edilemez-462298
