The endless agenda of politics: Central Bank reserves

The Central Bank’s reportedly missing USD 128bn reserves have created an endless cycle of recriminations in recent days. The opposition parties addressed the question aboutof where the USD 128bn is to the government at every chance they could get. They offered a commission and a debate atin the parliament for thean investigation the . Posters put up by the Republican People’s Party (CHP) asking where the USD 128bn were taken down by a legal orderis an. The former Central Bank Governor and IYI Party Deputy Durmus Yilmaz stated that the Bank should be audited by the Turkish Court of Accounts. Lastly, AK Party Chairman of Economic Affairs Nurettin Canikli made a statement from the government side, stating.:

“They are trying to create chaos with sensational and accusatory statements such as where USD 128bn has gone, whether USD has been sold at a low price or has been benefitted someone. Let’s detail it. The USD given by the Central Bank to the markets directly or indirectly through commercial banks is sold at the price marketi. The bank doesn’t set the price of USD. The price is based oni the market. That’s why the question of whether the Central Banks is selling USD at a low price or not is a product of ignorance possible.”

“The Central Bank sold USD 30bn in order to finance the current account deficit (CAD),” Canikli said. (The current account posted a USD 6.8bn surplus. Accordingly, CAD reached USD 36.8bn in 2020.) “In other words, exporters bought USD 30bn. Gold imports totaled USD 36bn in 2019 and 2020,” he added.
“USD 75bn was bought by real and legal persons who reside in the country. Accordingly, they converted TRY accounts equivalent of USD 75bn to USD. This USD 75bn exists in accounts at the banks in the country,” he said.

Canikli also stated that the private sector bought USD 43bn in order to pay its external debt. (The private sector’s external debt totaled USD 298bn at the end of 2018, which fell to USD 255bn at the end of 2020).
The outflow of portfolio investors amounted to USD 12bn in 2019 and 2020, according to Canikli. “Foreign investors took USD 12bn of foreign exchange (FX), which was brought by them to the country in the over the previous years and used in portfolio investments by converting to TRY, back to their countries by converting it back to FX,” Canikli said. “In other words, they bought USD 12bn of FX.”

“These four items total USD 160bn, which is quite above USD 128bn,” he noted. “This situation means that the bank sold USD 160bn in 2019 and 2020,” he said.

Canikli emphasized that periodical shifts can result in payments. “This picture shows us that all of USD 128bn was used to finance those payments,” he noted.

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