Turkey struggles to attract more lira savings to bolster its currency

This content was published on January 11, 2022 – 17:22

Dogan Tilic / Ilya U. Topper

Ankara/Istanbul, Jan 11 (EFE).- The Turkish government’s fight to strengthen the national currency, the lira, by encouraging savings accounts in Turkish lira entered a new phase today, expanding the program of savings guaranteed by the dollar exchange to companies, which for some economists underlines the failure of the initiative.

Amid an unprecedented collapse of the lira, which was trading at 20 units to the euro and 18 to the dollar, Turkish President Recep Tayyip Erdogan on December 20 announced an incentive package to prevent the Turks from save in foreign currency.

Since then, banks have been offering savings accounts with a fixed term of 3, 6, 9 or 12 months, at the market interest rate, but with the guarantee that when the term expires, the State will pay them the difference between their capital in lira and the value in dollars.

To date, according to the Central Bank, this initiative is extended to legal persons, that is, to business accounts.


Last Friday, the volume of money deposited in this modality reached 107,000 million liras, at the current exchange rate of about 7,700 million dollars, Deputy Finance Minister Mahmut Gürcan reported yesterday Monday, assuring that this showed the “extreme interest” of citizenship and the “success” of the program.

However, the professor of economics at the University of Gazi (Ankara), Aziz Konukman, considers that the extension of the initiative to companies is precisely “the veiled admission of failure”.

The amount deposited so far “is very small, considering the benefits. The idea was to exchange currencies for liras, but that did not happen,” adds analyst Erdal Saglam.

The government had counted on a conversion of up to 25 billion dollars into lira, but since that has not happened, it will now try to encourage or pressure large companies to comply with the forecasts.

“The increase shows that there was little demand. Maybe companies, with a bit of pressure, will transfer some volume of their capital into lira, but it won’t be much,” Saglam predicts at the Efe.


The amount announced by the government corresponds to only 9.7% of the total lira deposited by individuals and only 3.2% of the total savings of individuals, according to figures from the Turkish monitoring agency BDDK.

67% of personal savings are denominated in foreign currencies, a proportion that has not budged in recent weeks, suggesting that “the idea is widespread that the exchange rate will go up and that there is little of confidence in the economic authorities”, points out Saglam. outside.

This analyst and Professor Konukman told Efe that companies wishing to take advantage of the guaranteed savings account offer must demonstrate that the amounts deposited come from foreign currencies or from gold exchanged for liras after December 20.


Citizens who came to open these accounts privately were not asked for any such proof, confirms to Efe the businessman and analyst Emre Deliveli, who already made use of this offer in December.

“It was free for me,” he says, referring to the fact that the state will now guarantee him profits for the capital he already had in lira.

But both Konukman and Saglam criticize the fact that public money will thus be used to protect the interests of those who have savings, instead of alleviating the problems that inflation – standing at 36% year-on-year in December – creates for the most modest. Classes.

“The people’s money is transferred to the accounts of the owners of large savings and now also to companies”, summarizes Saglam.

“That money will have to come out of taxes, or money will have to be printed or borrowed…or they will end up issuing special bonds, but either way it will be public money, and Parliament will have to debate that. additional budget,” Konukman predicted.

The success of the initiative remains to be seen: immediately after the announcement, the lira rebounded dramatically, gaining 65% in just four days.

But then it lost half of what it was earning again and since the beginning of the year it has remained stable at 13 liras for a dollar and 15 for a euro, with a slight downward trend.

And all economists are convinced that the recovery was not due to an avalanche of citizens eager to open lira accounts, but to an operation by public banks that sold billions of dollars to promote this coup. . EFE



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