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Jan 17 2019

Turkish central bank to approve $6.9 billion cash transfer on Friday

Turkish central bank executives will hold an extraordinary meeting on Friday to approve the transfer of 37 billion liras ($6.9 billion) to the Treasury and Finance Ministry.

The money will be transferred from the bank’s 2018 profits, Dünya newspaper reported on Thursday.

Turkey’s Justice and Development Party (AKP) government, preparing to fight local elections on March 31, is seeking more funds to help the economy recover from a severe downturn. The central bank has changed its bylaws to allow the early transfer of the cash, which it has handed over in April during previous years.

A significant proportion of the funds will be available to the government this month, Treasury and Finance Minister Berat Albayrak said last week. The transfer means that “earlier liquidity” can be provided to Turkey’s financial markets, he said.

Some economists say that the money amounts to a sweetener from the central bank as it works to fight inflation by keeping interest rates elevated. The government exerted political pressure on monetary policymakers last year to keep interest rates low, leading to big losses for the lira as they delayed rate hikes.

The central bank kept its benchmark lending rate on hold at 24 percent in a meeting on Wednesday. Inflation in Turkey has slowed from a 15-year high of 25.2 percent in October, but still hovers just above 20 percent.