New Turkey, New Economy. How Much Did the Dollar Rise Against the Turkish Lira?
President Erdogan announced his new package in the economy. Erdogan said that protecting TL prices will oppose the storage in exchange rates.
President Recep Tayyip Erdoğan addressed the nation after the Cabinet Meeting at the Presidential Complex.
Reminding that they held the Turkey-Africa Partnership Summit in Istanbul with wide participation last week, Erdoğan stated that after the two summits they held in Istanbul in 2008 and in Malabo in 2014, they once again hosted African leaders in the country.
Expressing that the 3rd Turkey-Africa Partnership Summit, which they organized with the theme of strengthening the partnership for development and prosperity together, was extremely successful and productive like the previous ones, Erdoğan said that they discussed bilateral relations and regional issues with his African counterparts.
Erdogan said that they had a two-day tete-a-tete meeting with 15 heads of state and government from different countries of the continent and discussed the steps to strengthen education in the sessions held with the participation of ministers.
Trade With Africa
Emphasizing that they believe they have entered a new era in Turkey-Africa partnership with this summit, which they successfully held despite the epidemic conditions, Erdoğan continued his words as follows:
“We increased our trade with Africa from 5.4 billion dollars to 30 billion dollars in the first 11 months of this year. Now our goal is to increase our trade to 50 billion dollars and then to 75 billion dollars, I hope. We do not see Africa.” On the contrary, we see the continent as a rising power that will leave its mark on the 21st century and whose weight is increasing in the international system. “We are trying to further strengthen our cooperation on the basis of profit and equal partnership. I wish the 3rd Turkey-Africa Partnership Summit, which we held in a critical period, to be beneficial. On behalf of my country and nation, I would like to thank everyone who contributed and participated in the organization of the summit.”
Erdoğan wished that the 2022 budget, which was accepted after the discussions at the General Assembly of the Turkish Grand National Assembly, would be beneficial to the country and the nation.
Expressing that the budget marathon in the Grand National Assembly of Turkey was a very long, difficult and tense process that started on October 15 and ended on December 17, Erdoğan said that this year’s talks consisted of the budgets of 225 public administrations supervised by the Deputy Secretary General. President Fuat Oktay held a total of 385 meetings on behalf of the Presidency. He said it’s out of time.
Erdoğan stated that he will contribute to Turkey’s growth targets through investment, employment, production and exports with 67 strategic programs placed in the budget.
Our budget, which includes the steps in line with the green development revolution, which is the first and most ambitious goal of our 2053 vision, which is the focus of our future projections, stands out with its innovative and environmentalist aspects. To date, we have determined the 2022 budget within the framework of income and expenditure tables that will serve the goals of our country and the welfare of our nation. 1 trillion 751 billion liras and revenues increased by 30 percent compared to the previous year and reached 1 trillion 473 billion liras. Accordingly, the primary deficit was calculated as 38 billion liras. 128 billion liras for purchases, 290 billion liras for the social security system, 657 billion liras for current transfers, 150 billion liras for lodgings, 26 billion liras for agricultural support to public administrations, 23 billion liras for duty expenses for institutions, 148 billion liras for investment expenditures.
Thanking the institutions that contributed to the budget preparation process and the deputies who contributed to the process with their suggestions, criticisms and evaluations at the legislative stage of the budget, Erdoğan wished the 2022 budget to be beneficial to the country and the nation.
“We Will Close 2021 With Double-digit Growth”
President Erdoğan emphasized that Turkey has an economy that has achieved an average growth rate of 5.1% in the last 19 years.
Stating that they achieved an unprecedented success in the history of the Republic by growing the economy every year, apart from the 4.8 percent contraction they experienced in 2009 due to the impact of the global financial crisis, Erdoğan said:
“In 2020, when the epidemic ravaged the whole world, we grew by 1.8 percent while everyone shrank. I hope we will close 2021 with a double-digit growth. Despite the population that increased from 65 million to 84 million in our country, our nation’s business and economy increased by increasing our employment from 19 million to 29 million during the period of our governments. Thanks to the infrastructure and superstructure investment of 3.5 trillion dollars, which we have made covering every inch of our country’s land, we have taken steps that will make Turkey, which shines in its region and in the world, smile on everyone’s face with its importance in every field.
Our dear nation knows best what obstacles we face in every step we take in this process. We have brought our country to its current level by overcoming many obstacles, from tutelage traps to coup attempts, from terrorist attacks to international embargoes. Now we are striving to place Turkey among the top 10 economies of the world and to move it to the top of the global development league. We are people who believe that there is a calculation above every calculation, that there is no problem that we cannot overcome with the strength we derive from our civilization and history, and that our superiority stems from this.”
Erdogan said that they are determined to bring Turkey, which they have brought to the place it deserves in democracy, development, security and diplomacy, to achieve the same success in the economy.
Stating that the financial movements that have nothing to do with the rational functioning of the economy and the problems caused by the exorbitant price increases, Erdoğan said, “As a nation that puts its life on the line for the sake of its faith, honor, homeland and values that it considers as dear as them, it will be able to cope with these cyclical difficulties. We have the will.” he said.
Stating that as the government, they have taken the necessary steps in this context, Erdoğan stated that the ministries and relevant institutions have taken action against those who make the daily life of the nation difficult with hoarding and exorbitant prices.
Expressing that the Turkish Grand National Assembly also contributed to this fight by adopting a law that increased the penalties for hoarders last week, Erdoğan said, “We are fulfilling our promise not to crush our employees under the cost of living. By increasing the minimum wage by more than 50 percent, the lowest income figure has reached 4 thousand 250 liras. We have reduced the burden of our employers by 450 liras by removing the income tax and stamp tax from the minimum wage.” said.
Wishing the new minimum wage to be beneficial, President Erdoğan stated that they have implemented many packages under various headings to support production and employment.
Good News in Turkish Lira Deposits
Erdogan, who determined that they bought the re-broadcasting to the market in order to stop the evaluation in the exchange rate and release a relative evaluation, stated that they will create a new one that they will implement, and then they will share information about these issues with the public.
President Erdogan continued as follows:
“While evaluating his savings, he will not be able to avoid losing sight of his estimates due to the estimation in the exchange rate. Any remaining over can be paid to our user from the difference. In addition, he will benefit from this income and will be exempted from the withholding tax. In honor of realizing it.”
Forward Exchange Rate Opportunity for Exporters
Expressing that his good news is for exporters, Erdoğan continued:
“Our exporting companies, which have difficulty in giving prices due to the fluctuations in the exchange rate, will be given forward exchange rates directly through the Central Bank. The exchange rate difference that may occur as a result of this transaction will be paid. We will increase the state contribution rate in order to increase the attractiveness of our Private Pension System, whose fund size has reached 250 billion TL.” We increase it from 5 percent to 30 percent. Currently, while the withholding tax on Eurobond interest incomes is zero, this rate is applied as 10 percent on government domestic debt securities. We are reducing the withholding tax to zero percent here to increase the demand for government securities. We are planning a 1-point reduction in corporate tax for export and industrial companies in order to support international competition and encourage investments by reducing the tax burden on corporate earnings.”
“We Are Reducing the Withholding Tax on Dividend Payments to 10 Percent”
Stating that they have rearranged the value added tax to ensure efficiency, fairness and simplification, Erdoğan said, “With this step, our aim is to reduce the informal economy, improve the business and investment environment, encourage exports and provide our companies with rapid access to finance through VAT refunds.” aforementioned.
Stating that the taxes collected from dividends and the declaration of this income have become a deterrent for investors, President Erdoğan said, “In order to eliminate this problem, we are reducing the dividend withholding tax to be made by companies to 10 percent. Profit is obtained from mutual funds and partnerships. Participation earnings of dividends received are excluded from the exception. We eliminate this difference.” said.
“There Is 5 Thousand Tons of Gold Worth 280 Billion Dollars Under the Pillow”
President Erdoğan said, “Investors will be encouraged to turn to Turkish lira-based assets by issuing public debt securities indexed to income shares obtained from public economic enterprises and transferred to the budget. It is known that there is 5 thousand tons of gold with a value of 280 billion dollars under the pillow in our country. These golds are included in the financial system and added to the economy. New tools will be developed together with market stakeholders in order to gain
Pointing out that a structure will be established that will enable public banks to provide a certain percentage of their total loans to priority sectors, which will be announced every year in a transparent manner, Erdoğan said, “With the support of the Credit Guarantee Fund, long-term employment protection and development priority business loans will be given. The steps taken in project banking will be accelerated. Yes. We will rapidly implement all these measures that will strengthen the climate of stability and trust in our country, together with our relevant institutions and our Parliament.” he said.
Wishing the measures to be beneficial, Erdogan said, “We have not and will not tolerate any game or trap aimed at excluding Turkey from the restructuring process of the global economy, as has been the case many times in the past. We continue on our way with determination, courage and determination, in line with our goals.”
“Global Powers Are Fighting Economically”
Drawing attention to the situation in the world while this is the situation in Turkey, Erdoğan emphasized that the global powers that make up 80 percent of the world economy are fighting the biggest economic fight in recent history.
Pointing out that the sole purpose of all major economies since 2008, when the global financial crisis was experienced, is to protect employment in their own countries, Erdoğan said that this is the reason for the invisible war between developed countries that are constantly pursuing monetary expansion despite their very strong financial structures.
Underlining that the monetary policies of the European Central Bank, the Central Bank of America, the Bank of Japan, the Central Bank of China and others are determined based on protecting employment, Erdoğan said:
“These countries, which print money wildly, keep interest rates close to zero or even negative, and raise their central bank balance sheets almost to the level of their national income, admit that they still cannot get rid of the swamp of uncertainty. While European countries devalued their currencies by 50 percent overnight during the transition to the Euro, invisible barriers were placed on our industry and trade, excluding Turkey. Despite the efforts and sacrifices we made during the period of our governments, we tried to keep our industry afloat, develop our trade and exports. We have succeeded. Now we are going through a process in which different arguments and tools are put into use for the same purpose. While the world is swimming in a debt swamp of more than 220 trillion dollars in total, 90 trillion dollars of which belongs to the public, there is a great loss to Turkey. To insist on raising interest rates means nothing more than mocking people’s minds.”
“Election in June 2023”
President Erdoğan continued his speech as follows:
“We will confuse those who apply for the way and methods of making money from money by taking the loan from the public bank and transferring it to another place.”
Erdogan said, “(To TÜSİAD) You are meeting with Mr. Kemal and talking about the early elections without being embarrassed or bored. Don’t be fooled, these are dreams. You will wait for June 2023.”
President Erdogan, “I invite everyone who has money and access to finance to investment and production.” said.
“If Turkey is going to step up in the economy, it’s time to take action,” Erdogan said.
President Erdoğan made the statement that “If Turkey is going to jump in the economy, it is time to take action”.
Erdogan continued his words as follows:
“Whoever thinks that with currency speculation, exorbitant price and interest pressures can turn our country away with outdated economic models, he is wrong.”
How much was the dollar in Turkey?
After the economic package announced by President Erdogan, the subject that everyone wondered about was the “dollar to lira turkey“. Turkish Dollar/TL decreased from 18.36 to 12.27. Euro/TL, which was at the level of 20.80, decreased to 14.07.
Dollar/TL, which started the new week with 16.90 liras and broke a record by exceeding 18.36 liras during the day, returned to 12.27 TL levels with the new package announced by President Recep Tayyip Erdoğan after the cabinet meeting.
The difference between President Erdogan’s interest rate to be paid on TL deposits and the foreign currency yield was evaluated by the market as an implicit interest rate increase. After the announcement, there was a rapid increase in the value of TL, as the interest, which is seen as the value of money, would indirectly increase. The rapid decline in the dollar was attributed to this.