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6.0 Public Sector 6.1 Budget
6.1.1 Budget dynamics - specific issues
The Turkish parliament on July 17 ratified an economy law that amends the allocation of central bank legal reserves and debt restructurings, the state-owned Anadolu news service reported. Under the changes, 10% instead of the previously outlined 20% of central bank profits will reportedly be set aside as legal reserves and the accumulated amount from previous years will be sent to the Treasury. The funds will help officials tackle the country’s worsening budget situation. Turkey’s budget deficit stood at Turkish lira (TRY) 78.58bn ($13.82bn) in the first half of this year. The government forecasts that for the full year it will reach TRY80.6bn. The central bank legal reserves, which are distinct from its foreign exchange reserves, are designated for use only in extraordinary circumstances.
The central bank will now take into account the on and off balance sheet items of banks and other financial institutions when calculating required reserves under the legislative changes.
The ratified law also includes changes in debt restructuring, Anadolu said. Corporate loans could be restructured partially or as a whole by lenders if the given firms are assessed as capable of paying back the debt.
The news agency further reported that Turkey has extended its wealth amnesty measures for assets brought into the country until the end of this year.
Turkish officials have reportedly told bankers that the government is set to exceed its new debt and budget deficit targets. The Treasury is looking to revise up its target for debt sales relative to repayments—the so-called rollover ratio—to an average of between 100% and 110% in 2019, people said to have direct knowledge of the matter were quoted as saying by Bloomberg on July 29, following a private meeting between bankers and top ministry officials that took place last week. The initial target was 93.5%, down from 98.1% a year earlier.
Turkey is feeling fiscal pressure given economic turmoil that is in danger of producing a double-dip recession and government spending, first in advance of local elections and then prior to the Istanbul revote lost by the
35 TURKEY Country Report August 2019 www.intellinews.com