Jul 01 2019

Turkey is printing lira by funding budget via central bank – columnist

Turkey will use 94 billion liras ($16.5 billion) in profits and special reserves of the central bank to help pay for a spending splurge and a slump in revenue, economist and columnist Uğur Gürses said.

The central bank has already provided its profits for 2018 of 38.1 billion liras and now the government wants to use 46 billion liras that includes money set aside by the bank for emergencies, Gürses said on his website.

The transfer of the capital is equivalent to printing money and will do the economy no good at all, Gürses said. There are many previous examples around the world to back this up, he said.

Turkey foresees a budget deficit for this year of 80.6 billion liras in an economic programme announced in September. The deficit for the first five months of the year was 66.5 billion liras, or 83 percent of the target, after tax revenue slid and spending surged. The gap was more than triple last year’s figure.

Turkey has revived a plan to use the bank’s emergency funds to help close the budget gap, Reuters reported last week citing unidentified officials with knowledge of the matter. The central bank’s profits were handed over at the start of the year, four months earlier than planned.

https://ugurses.net/