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accounts.
Fitch Ratings last month flagged the growing risk of government intervention in the banking system as it seeks to shore up its external finances. Such a move could hinder the ability of the country’s banks to service their foreign currency obligations.
Turkey has around $80bn in short-term FX debt coming due between now and the first quarter of 2021, according to Filippo Alloatti, senior analyst at Hermes Investment Management, who told Reuters that the rollover process would not be easy but could eventually be done.
The news agency also ran notes from Uday Patnaik, head of emerging market debt, Legal & General Investment Management, which is underweight Turkey. “The issue around Turkey is not really per se the sovereign itself but it’s the impact of all the short-term loans in the banking sector [that] would potentially have on the sovereign. It is something that is concerning us,”
“In the unlikely event that Turkish banks are not able to roll over their loans, this could create pressures within the banking system and on central bank FX reserves, if there is a need to provide foreign exchange,” he said.
Even the different regulatory bodies in Turkey do not closely follow up on each other’s new regulations and amendments to existing regulations, not forgetting the amendments to amendments. It is not uncommon, however, to see regulatory bodies employing amendments to their own regulations to comply with amendments made by other regulatory bodies to already amended regulations.
The central bank, the BDDK banking watchdog, the SPK capital markets board and the trade ministry separately issue new regulations along with amendments to existing regulations with an impact on banking.
The BDDK has employed a proactive perspective in introducing around 50 regulations since the beginning of the coronavirus (COVID-19) outbreak, Mehmet Ali Akben, head of the regulator, said on June 14.
His figure does not include regulations and regulatory amendments introduced by other authorities, while the overall list of regulatory forbearance instances since 2016 would deserve a PHD thesis.
2.9 Business and consumer confidence surveys
18 TURKEY Country Report July 2020 www.intellinews.com
