Turkey .. a package of new economic measures to confront Corona

Zaher Albik-Ankara

The Corona virus epidemic arrived in Turkey before it fully recovered from the economic crisis that began in the summer of 2018, where it planned for 2020 to be the beginning of the return of economic recovery, and the epidemic started in China, its third largest trading partner, then turned its focus to the European Union countries, its largest trading partner. Absolutely. 

And more than a month after the announcement of the first infection in the country, observers say that the economic effects of the epidemic are still weak and unseen, but they are likely to worsen the longer the epidemic and the length of the exceptional measures imposed on the people, which affected the various sectors of work and the economy.  

planEconomic
in the face of the epidemic, the Turkish government has announced an economic stability shield plan that includes a package of economic measures to tackle the Corona virus, and has allocated 100 billion Turkish liras to it ($ 15.5 billion).   

The Turkish Economic Stability Shield package includes the following items: 

Postponing the payment of the social security institution's due installments within three months to a period of six months. 

Reducing the value added tax during domestic flights from 18% to 1%, for a period of three months. 

- To extend the repayment period of factory loans affected by Corona and interest payments to banks by about three months. 

- Provide support to exporters in this stage of temporary export decline. 

- With regard to the purchase of houses with a value of less than five hundred thousand pounds, the down payment is reduced to 10%, and the percentage of the installment amount is increased from 80% to 90%. 

- Increasing the minimum pension to 1,500 liras, and the Eid grant will be offered to retirees. 

- Allocation of an additional two billion pounds to the Ministry of Family and Labor, to provide financial assistance to needy families. 

- Activating the social and medical services program in homes for elderly people over the age of eighty years. 

In a statement issued by him, Tharwat Terzilar, a member of the Turkish Foreign Economic Relations Board, considered the new economic package as an outlet for the Turkish economy and SMEs. 

"The shield of economic stability is a safe haven for companies that have been suffering from economic hardship," said Chitin Tiglıcıoوlu, President of the Association of Industrialists. 

For his part, the head of the Association of Home Supplies Exporters in Turkey, Burak Onder, stressed that "the announcement of the economic package promoted social and psychological confidence in society." 

It is noteworthy that the Turkish Central Bank announced in a statement an increase in economic measures to counter the negative effects of the Corona virus on the national economy, and among the planned measures is to increase the flexibility of cash liquidity with banks in Turkish lira and foreign currencies, and additional measures to ensure the continued flow of credit to the real sector by supporting exporters of goods and services on wide range. 

Finally, the central bank announced a 100 basis point rate cut on one-week repurchases from 10.75% to 9.75%. 

According to a study published by the Al-Jazeera Center for Studies, despite the Turkish government's assertion that it continues to follow the economic conditions, there is fear that the economic stability plan may be insufficient, and that the most prominent concern is that its benefit is partial and temporary, especially if the crisis is prolonged, and what supports this The hypothesis is that the Turkish lira fell by 10% against foreign currencies during this period. 

 Also, the central bank reserves declined by more than ten billion dollars in just one week after announcing the support decisions to stand at the limit of 93.5 billion dollars. 

PackageMotivating
the economic journalist in the Turkish Daily Sabah newspaper, Ahmed Ismail, stated that the state banks have been selling hard currencies in the markets to support the besieged lira and curbing foreign exchange rates, and these interventions have consumed about forty billion dollars, the central bank could keep them as foreign reserves in Such a crisis. 

Ismail said to Al Jazeera Net, "The economic shield plan came mostly in the form of tax exemptions, deferred payments and tax cuts for companies, and direct cash injection operations form a small part of it." 

He pointed out that the package allocates an additional two billion pounds to government-run social assistance and solidarity institutions, which provide various forms of assistance to those in need, and accordingly, the monthly funds available to institutions will increase by a third to 180 million pounds. 

The journalist at the Daily Sabah believes that the government cannot ignore calls for social support with the closure of many businesses and the expected inflation of the army of the unemployed, so it is increasing pressure on them to do more. 

"For fear of joining the army of the unemployed, who numbered about 4.5 million unemployed last year, many workers had no choice but to continue going to their jobs in factories, mines and construction sites," he said. 

Ismail explained that the government plan expands the assistance from the unemployment insurance fund through the "short-term work payments" clause, which is paid over a period of three months to employees of companies that were forced to close temporarily due to exceptional circumstances. 

The economist added, "The government's attempts - which many consider" symbolic "- to deal with the crisis are mainly related to the fragility of the Turkish economy as a result of the ongoing crisis, which has worsened more since the beginning of the outbreak. 

He added, "The government may have to print more money at the expense of further spoiling the financial expectations of Turkey in the eyes of foreign creditors." 

Based on the foregoing, the coming weeks will be an important test for the effectiveness of the support packages approved by the government and the financial decisions taken by the Central Bank in mitigating the negative repercussions of the epidemic.