What matters on Thursday, February 10

Central Bank (CB) Governor Sahap Kavcioglu convened with members of the Union of Chambers and Commodity Exchanges of Turkey (TOBB). According to sources, one of the main agenda items of the meeting was the usage conditions of the rediscount credit, including the obligation to convert from foreign exchange (FX), insistence on a six-month maturity in FX-protected TRY deposit accounts (KKM), conversion of 25% of export revenues into TRY, and high commercial loan interest rates. Kavcioglu said all exporters can use rediscount credits with a 9% of interest rate and that support to  companies will continue in the transition to TRY. No steps are expected from the Central Bank regarding the conversion of 25% of export revenues into TRY, according to sources. However, they were under the impression that the maturity in the KKM could be reduced to 3 months.

Companies hold USD 90 bn in FX deposit accounts and their 1-year account activities are low, according to the CB Governor. “USD 50bn of them are savings held by companies while the remainder is held for transfer payments. In the case of transition to KKM, the desired maturity can be imposed on USD 50bn, according to the analyses. That’s why the maturity for the KKM is at least six months and companies have tax advantages in the KKM,” Kavcioglu added.

The Independent Industrialists and Businessmen Association (MUSIAD) Chairman Mahmut Asmali held a press conference to evaluate hot topics on the country’s economic agenda. Discussing the KKM, Asmali said the minimum maturity should be set as six months for legal entities. “We stated that six months would be long when this decision was taken. We expect the maturity to be revised as three months. We’ll present this issue to the Treasury and Finance Minister.” Stressing that inflation continues to be the biggest economic problem in Turkey, the MUSIAD Chairman said they expect the government to wage its ‘biggest’ battle against inflation. Touching on the current level of FX rates Asmali added: “The current level in FX rates is high. We want the FX rate level to be slightly lower than this. Industrialists want the FX rate fluctuation to end. The KKM has ensured this. Although industrialists are dissatisfied with the current FX rates, they are pleased about the removal of the fluctuation. The levels of 11.00-12.00 would be more appropriate for USD/TRY.”

Minister of Energy and Natural Resources Fatih Donmez gave signals that there would be different electricity tariffs for tradespeople and small enterprises. “We receive demands from different segments of society that will benefit from the discounted tariff. Our ministry and the Energy Market Regulatory Authority is evaluating these demands. Nothing is clear yet. We’ll share when tariffs become clear,” Donmez said.

In the meantime, Republican People’s Party (CHP) leader Kemal Kilicdaroglu tweeted a video discussing high electricity bills. He also emphasized that the tax on electricity bills must be removed. “I won’t pay any electricity bills until President Recep Tayyip Erdogan withdraws the price hike,” Kilicdaroglu said in the video message.


The Construction Cost Index (CCI) climbed by 67.74% in December 2021, compared to the same month last year, according to the Turkish Statistical Institute (TurkStat). The CCI jumped 15.7% in December on a monthly basis.

The unemployment rate dropped by 0.1 points to 11.2% in December 2021, compared to November, according to TurkStat. The number of unemployed people aged 15 and over rose by 2,000 to 3.79 million in the same period.

The overall export unit value index rose by 6.6% while the overall import unit value index increased by 25.7% in December 2021, compared to the same month of 2020, according to TurkStat. The overall export volume index surged by 17.1% while the overall import volume index rose by 3.3% in the same period.

The Central Bank and the Banking Regulation and Supervision Agency (BDDK) will release weekly money and banking statistics (2.30 pm).


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