According to reporting by Reuters, President Erdoğan explained that unnamed Gulf Countries recently provided “short term financing” to Turkey to ease economic pressure. While the President did not specify the countries, he explained that he would receive their respective heads of state and visit them in return as a thank you.
As Turkey’s critical runoff election mere days away, President Erdoğan appeared on a joint broadcast for CNN-Turk and KanalD where he accused the opposition of being used by shadowy forces bent on collapsing the Turkish economy. Erdoğan urged ease and assured that the Turkish economy, banking and finance secretary were strong. Eroğan went on to explain that Turkey had secured financing from Gulf states, saying:
“some Gulf states and such stocked money in our system. This is recent and this relieved our central bank and market, even if for a short while,
After Sunday’s election, you will see how these leaders will come here and how I will visit them to show gratitude,” he added.
In recent years, Turkey has made credit swap deals to the tune of 28 Billion Dollars with countries including UAE, Qatar, China, South Korea in light of its fledgling economy. Despite a bevy of foreign cash however, Turkey’s FX reserves have hit a deficit this week for the first time since 2002.
While the Turkish economy often stagnates around the time voters head to the polls as election cycles present uncertain times for investors, the depletion of foreign reserves is an uncommon and concerning occurrence. The Erdoğan government has been taking drastic measures in an effort to hold onto its dwindling FX reserves and to prevent the further devaluation of the Lira, such as limiting foreign currency exchanges for legal entities to $5,000 per day earlier this week.
CHP General Secretary and economist Prof. Dr. Selin Sayek Böke heavily criticized the government alleging mismanagement leading to depletion of foreign exchange reserves and wrote:
https://twitter.com/selinsayekboke/status/1661715554690912266?s=20“According to the most recent data, the Central Bank’s net reserves, including SWAP’s, fell to the negative for the first time since 2002, reaching -0.2 billion dollars.
After deducting SWAPs, net reserves drop to -60.3 billion dollars, and when the Treasury’s foreign exchange is excluded, it drops to -76.2 billion dollars.
Foreign exchange reserves are depleted.
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Banks have become unable to meet even very small foreign exchange withdrawals. The picture is grim. We are experiencing a foreign currency shortage. We are on the eve of a balance of payments crisis. “
IYI Party Economic Policy President Prof. Dr. Bilge Yilmaz added:
Merkez Bankası rezervleri tükenmek üzere, her ay 8-9 milyar dolar cari açık veriyoruz, şirketler üretimlerini/ticaretini sürdürebilmek, vatandaşlar ise sisteme güvenmedikleri için dolar talep ediyor.
— Bilge Yılmaz (@ProfBilgeYilmaz) May 23, 2023
Burada cevaplanması gereken önemli bir soru var: Erdoğan bu pazar seçilirse 29…
“The Central Bank reserves are running out, we run a current account deficit of 8-9 billion dollars every month, companies demand dollars to continue their production/trade, and citizens do not trust the system.
There is an important question to be answered here: If Erdogan is elected this Sunday, where and how will he find the dollar that the markets need after May 29?
Of course it won’t, and capital controls will expand. Those who set a comical foreign exchange limit of $5,000 to companies today, may ban it completely next week.
The consequences of this will be very severe for all of us.
Economy will stop
Companies will go bankrupt
There will be black market
Unemployment will increase
We still have a chance to survive the destruction of the economy with the least possible damage. Let’s not waste this opportunity.”
