TR Economy & Updates

Nilgiri

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Called it earlier:

I don't think a default is going to happen, though Turkiye will come under further economic strain for sure.

The largest foreign policy activity concerning this will likely be Turkish administration approaching more gulf countries for capital account funding by either SAFE (State administration of Foreign Exchange) deposits and/or currency swaps.

It is unlikely this will occur with any others (West, China, East Asia) given current geopolitical and economic climate (a long topic to get into)

Gulf countries on the other hand have ample reason to improve relations with Turkiye and/or extract more concessions and political capital (from say Erdogan admin) by doing so.

Their 5 largest sovereign wealth funds :

ADIA (UAE) ~ 700 billion USD
KIA (Kuwait) ~ 700 billion USD
PIF (KSA) ~ 580 billion USD
QIA (Qatar) ~ 450 billion USD
ICD (UAE) ~ 300 billion USD

Its unclear what state of leveraging these are all at with their own domestic and other commitments though....but just to give an idea of what I feel Turkiye will approach (given its now poor international credit rating) in greater capacity now past what it has dabbled so far with sukuk bonds and some currency swaps mostly with these same countries.

The drop in Turkish forex is starting to look very concerning (given its trade, investment and GDP denominators):


Looking at bare minimum ratios that other developing countries under financial stress have had recently or in the past..... TR will want to stabilise at least above 50 billion given its imports are ~300 billion a year and more importantly with the CAD trend where it is:


i.e it will need about 50 - 100 billion injection (depending on current account performance this year compared to 2022) on capital side this year to handle both this and the capital account debt repayments given what its burning through on both current account side and domestic fiscal side.

This is a malady that has been allowed to get to this stage...by reasons long discussed in this thread.

IMF and Erdogan admin will find zero common ground....as the latter will simply not reverse the low interest rate policy that in large part worsened this deep mess to begin with.

So there is no chance of IMF being involved in foreseeable future. The meeting ground is burned and salted already basically.

I mention the gulf countries because thats where Turkiye has mostly been able to sell its sukuk bonds (well past its regular bonds) and arrange currency swaps to essentially buy time till this election being done now.

It was not small amount of money, some 10's of billions of dollars so far.... I'd have to look into it for exact amount, but the matter stands that they are the likeliest option for continued funding to keep ship afloat.

Even on this forum, lot of members miss the woods for the trees by focusing on smaller sectors of their particular interest rather than learn about the larger economy (and its deep systemic problems) and call out those issues fairly to powers that be.

Overall a lot (cost and impact wise) depends on what specifics play out post election:

 

Anastasius

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This guy is going to put Turkey in massive debt to the Gulf states to avoid doing the obvious to fix the economy.
 
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dBSPL

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Countdown to Default for the US treasury:

FxDXVk7WIAEbSqi
 

Crush716

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“A picture not seen in 41 years; No, this is not for the sake of the country, but to cover up political mistakes, to save political survival...
No turbulence-crisis (1988, 1991, 1994, 2001) has had this degree of...

The picture that CB Erdogan says "relaxed" is the increase of the deficit, which was -40 billion dollars in March, to 60 billion dollars.
Saudi deposits came in mid-March. Foreign exchange continued to be sold to hide the flaw of the fake economic policy. It's called "relaxed".

Gross reserves before the second round of the election are below $100 billion. Despite the 'great invention' KKM, the obligation to bring 40% of the exporter's foreign currency to the CBRT, the swap-warehouse from the Gulf, the postponement of funds + gas from Russia, the foreign exchange buying-pricing restrictions, it is necessary to ask "WHY".
 

Anastasius

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Get loans from the IMF or London loan sharks you mean?
How about admitting that keeping the interest rates low is a bad idea?

Also the IMF does not give out loans for nothing. These loans come with specific advice on measures to take to improve the economy. And when inevitably you have a country that takes the money, does not follow the advice given by the IMF and predictably their economy continues to tank, you have people looking to blame the big, bad IMF for the crime of...*gasp*...giving money to you with the assumption that you will be taking measures to improve your economy instead of admitting that you messed up and wasted their money.

Instead you propose that taking money from Gulf monarchies claiming that they will not "boss" Turkey around...ignoring that they have geopolitical conflicts with Turkey and absolutely will use their newfound influence over the Turkish economy to direct Turkey to abandon its geopolitical goals if it doesn't serve their goals. According to some, Qatar already does this, directing Turkey with one hand while stabbing it in the back with the other.

I swear, some people's dislike of anything to do with the West is so intense that you would open your doors to Satan if it would spite the West.
 

TheInsider

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If things stay on this trajectory I expect a significant devaluation after the elections. There is a vast dollar scarcity in the markets. London bankers offer dollar loans at an insane interest rate Gulf Arabs are no better they offer only a few percent lower interest rates. I wanted to withdraw 10k dollars cashier tried to persuade me not to withdraw by offering some deals, then tried to persuade me to withdraw my money in Turkish liras then tried a 2k dollars+Turkish liras combo I rejected all and after that, he wrote my name to a list, and told me to come one week later.
We have an FX crisis at our hands. We can survive the tourism season at best.
 

Zafer

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How about admitting that keeping the interest rates low is a bad idea?

Also the IMF does not give out loans for nothing. These loans come with specific advice on measures to take to improve the economy. And when inevitably you have a country that takes the money, does not follow the advice given by the IMF and predictably their economy continues to tank, you have people looking to blame the big, bad IMF for the crime of...*gasp*...giving money to you with the assumption that you will be taking measures to improve your economy instead of admitting that you messed up and wasted their money.

Instead you propose that taking money from Gulf monarchies claiming that they will not "boss" Turkey around...ignoring that they have geopolitical conflicts with Turkey and absolutely will use their newfound influence over the Turkish economy to direct Turkey to abandon its geopolitical goals if it doesn't serve their goals. According to some, Qatar already does this, directing Turkey with one hand while stabbing it in the back with the other.

I swear, some people's dislike of anything to do with the West is so intense that you would open your doors to Satan if it would spite the West.

I don't dislike western people, I worked and lived with them for some years but I don't like the so called western capital that caused the collapse of the Ottoman Empire and also the previous to Erdoğan era Türkiye. We will not borrow their money anymore and before too long we may as well start lending.
 

TheInsider

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I don't dislike western people, I worked and lived with them for some years but I don't like the so called western capital that caused the collapse of the Ottoman Empire and also the previous to Erdoğan era Türkiye. We will not borrow their money anymore and before too long we may as well start lending.
While you are writing this Turkish bureaucrats are begging London loan sharks on the orders of Erdogan, to lend them dollars with a %10+ interest rate. You are living high on copium.
 

Zafer

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While you are writing this Turkish bureaucrats are begging London loan sharks on the orders of Erdogan, to lend them dollars with a %10+ interest rate. You are living high on copium.
You know very well that not borrowing from them means beyond what is required to roll the debt we owe them already. The debt stock does not go away overnight.
 
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