The highest monthly CAD in the history of the republic


The current account deficit (CAD) broke the record in the republic’s history in January and reached USD 9.84bn. The previous record was broken in March 2011 when the current account balance posted a USD 9.4bn deficit. The annualized CAD, meanwhile, hit USD 51.7bn, according to the Central Bank.

Who knows how many times I emphasized it before: There are some plans and targets. If those, who set them, worked in the private sector instead of the public sector, they would lose their jobs a long time ago. 

The CAD target is USD 22bn for this year, according to the 2023-2025 Medium Term Program (OVP). But how much did Turkey have a deficit in a month? USD 9.8bn! How much should Turkey have a deficit for the remaining 11 months? USD 12.2bn! The opportunity to post a USD 1bn deficit every month! What kind of innumeracy is this?

You estimated the current account balance to post a USD 47.3bn deficit for 2022 (the realization is USD 48.7bn), and you predicted this deficit to fall to USD 22bn this year. What a marvelous forecast!

Here we go! It’s only the first month of 2023, and 45% of the CAD estimated for the entire year has already emerged.

Of course, the current account balance can post a surplus in some months, and it may not have a deficit every month. Yet, holding the CAD at USD 12.2bn for 11 months seems impossible.

It is like gambling to forecast the CAD to decline to USD 22bn this year from its 2022 estimated value of USD 47.3bn.

The CAD was too high in January. But another negativity is in the detail of financing, and how this deficit is met.

Let’s assume that the current account balance posted a deficit. But there was a capital inflow to meet it, especially the foreign direct investment (FDI). We don’t talk about the real estate sale, but the actual FDI…

If this didn’t happen, the portfolio investment would flow.

If it didn’t happen too, an external source would be found in favorable conditions, and it would be borrowed.

None of these happened in January!

The FDI totaled USD 223m thanks to real estate sales. USD 514m in real estate sales were made to foreigners. So, if this sale wasn’t made, the FDI would be negative. 

The money, which came as the portfolio investment, totaled just USD 495m.

No foreign exchange (FX) came with the net borrowing; there was an outflow of USD 71m. 

Then, where did financing come from? 

We used reserves.

USD 9.34bn of the USD 9.98bn financing came from the Central Bank reserves in January…

The balance of payments data shows that the problem is huge. Moreover, nothing extraordinary happened in January. Turkey was hit by the earthquake disaster in February. 

If such an economic disaster bursts in January, who knows what kind of picture awaits us in February and after due to the adverse impact of the earthquake?

It’s obvious that this will our reality until the elections.

But the days when we won’t be able to manage this will also come!

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