The rise in the dollar also adds to the burden of the currency-protected deposits (KKM) invented by the government to stop the increase in foreign exchange. The sustainability of this system, which is pointed out to create risks for the economy in the future, is a matter of discussion.
KKMs account for 46.4 percent of time deposits and 25.8 percent of total time deposits, reaching a size of TL 1.3 trillion. The burden of these deposits to the public is estimated to reach 180 billion TL, when the payments made by the Treasury and the Central Bank (MB) and the amount of taxes waived are evaluated together.
Recently, banks call citizens with dollar deposits and ask, “Would you prefer KKM?” Therefore, the system is expected to grow further.
Economist Korkut Boratav said that the government will go as far as it can in this system in order to maintain growth at any cost. Boratav made the following assessment:
“All these factors are pumping domestic demand. They will continue as much as possible if there is no bottleneck in external financing. At maturity, the system will continue at appropriate rates. This means that a significant portion of Turkey’s total foreign exchange assets are transferred to the Treasury and the Central Bank.”
“CURRENCY BOUNTS HARD”
Pointing out that how to get rid of this system, which has turned into a trap in a possible change of power, should be discussed in advance, Boratav emphasized that a sharp jump in foreign exchange prices will be inevitable in the first stage. Stating that Turkey’s middle class sees foreign exchange and real estate as the investment tools that will secure it, Boratav emphasized that this will make the fight against inflation much sharper during the transition period in a possible change in power.
Boratav, adding that the government “stays away from the methods that alleviate inflation to the aggrieved working classes”, reminded that measures were taken to protect the consumer from critical price increases from Germany to England and said, “Unless such measures are taken in the fight against inflation, there is also a dramatic decrease in the real incomes of the workers. The reflections of the shrinkage caused by austerity will emerge,” he said.
Reminding that Nureddin Nebati, the Minister of Treasury and Finance, summed up this, he said, “We preferred the spinning of the wheels, production, export and investment, not inflation, except for the low-income,” Boratav continued as follows:
“They have created a model for themselves. The laborers will bear the burden until the end, but employment will drag on to a certain extent. This year’s growth forecast has been cut in half. 3.5, 4. They say, ‘I can handle this,’” he said.
“POST-CRISIS EMPLOYMENT COUP”
Boratav emphasized that if the austerity in public finances is added to the pressures to be created by the accumulation of foreign currency, except for the shock problem caused by the KKMs in the possible change of power, then the workers who have suffered great losses in the last 7 years will be hit by the employment losses caused by the contraction of the economy.
Noting that Turkey’s laboring strata experienced the heaviest distribution shock in the history of the Republic, Boratav said, “An additional pressure to be created by the shift to foreign currency will be added to the additional factors that pump inflation.”