The Turkish government has foreclosed 3.3 million Turkish bank accounts overnight. The measure was implemented due to excessive unfulfilled tax and social security obligations from millions of account holders. Among those impacted are approx. 2.5 million individuals and corporations with due tax and another 800,000 owing outstanding social security payments. The funds owed by these legal entities are an estimated 150 billion Turkish Liras (~ $26.3 billion).
Considering that it took place at the beginning of October, this movie will definitely result in delayed salary payments by companies and will certainly cause a headache for those employees looking to access their salaries.
Prior to this overnight measure, senior Turkish officials, like the nation’s Treasury and Finance Minister, Berat Albayrak, had repeatedly hinted at the restructuring of tax and social security payments in order to ease the burden of those having outstanding obligations.
Looking at Turkey’s current economic and financial climate, a country that had a 15% YoY inflation rate in August and a 19.75% interest rate in the same month, Turkey has a lot going against it.
“A week ago, we were selling this at 30 or 35 lira (around $6 or 5.30 euros). Now look — 49 lira!”, “In the past, prices would change every few months. Now it’s every week or two. It’s very hard for those on minimum wage, but mothers always make sacrifices for their babies.” – “We want stability.” (source)
U.S. sanctions are in a major way responsible for the economic recession the country is experiencing. Last August when the White House has announced new sanctions against Turkey the country’s national currency the lira fell by 50% against the dollar.
Many Turks are selling their liras and buying euros, dollars, and bitcoin with it and justifiably so. During the last day of this August, the lira fell by 16% against the dollar within just a few seconds. According to a survey conducted by Statista Turkey has the highest Turkey has the highest percentage of the population that has invested in the crypto market easily beating countries in that regard such as the United States and Australia.
Turkey’s $1 trillion worth of megaprojects are also slowing. Infrastructure projects, public works such as roads, bridges and the new Istanbul International Airport are being used to try to ramp up economic growth.
While Erdogan’s administration is trying its best for Turkey it cannot be more obvious that some of their missteps are hurting more than helping everyday Turks. This recent decision to electronically freeze millions of bank accounts will certainly have a negative impact on public trust and the economy in general.