Turkey’s Coronavirus economic package is unsatisfactory for the scale of the upcoming slowdown. Prior to the Coronavirus, Turkey’s economy was already weak. Actually, in the last 18 months, Turkey experienced many economic shocks. It went through a currency and political crisis, stagnant growth, and high rates and inflation. However, as of today, real rates are minus 2.6%. Thus, Turkey may have little to offer.
What is the Turkish government offering in the $15.4 billion Coronavirus package?
- Some tax, interest, insurance, and debt deferrals for certain businesses
- Support for Turkish Airlines
- A slight increase in the minimum payments to pensioners with some annual bonuses
- More funds for Turkey’s Credit Guarantee Fund
- Down payments for houses will be 10% instead of 20%
- VAT for domestic air travel to be cut to 1% from 18%
- Accommodation tax will be cut to 0% until November
- Exporters will receive some benefits
- Cash support for families in need up to $300 million
This new package is a drop in the bucket for millions of working people and businesses. It really does not offer any real help or assurances. Also, some incentives in the package are quite puzzling. For example, the accommodation and travel tax offered during a time when people should be “socially distancing” themselves.
What Turkish people actually want:
- Mortgage payment deferrals
- Other credit payment deferrals (car, credit card, etc..)
- Utility bill payment delays
- Commercial credit deferrals
- Unemployment benefits for all
- Job security
- Small business support
Moreover, many people who work part time, under the table, or seasonally are missing from the package completely. Many are working illegally because of Turkey’s chronic unemployment problem and employers that don’t want to pay tax. Without some assistance for them, it will be devastating.
Why isn’t the Turkish government offering more in the Coronavirus economic package?
- Exhausted most resources over the last 18 months (Turkey spend 100’s of billions trying to jump start economy)
- Foreign currency reserves are very low
- Wait and see approach
- Corruption
- Politics
- Don’t care
In conclusion, Turkey’s Coronavirus Economic Package is unsatisfactory. It does not address the real problems on the horizon. I believe, loan deferrals will be announced, but politicians will wait to fully benefit. Turkish people need to be assured now that they are protected. Thus, this will help end the coronavirus.
