TURKEY IS ON THE VERGE OF FINANCIAL DEFAULT

Experts predict that Turkey may suffocate from the shortage of dollar liquidity. The national currency (lira) is being devalued, and the reserves of the state treasury are rapidly depleting. Every day, the rate of lira breaks through the next “bottom”, setting record falling against the dollar.

Last Tuesday, 767 liras were offered for $ 100. During the day, the currency fell by 0.8%.

Compared to the beginning of 2020, the rate of the national currency fell by 29%.

The state regulator keeps the key rate at the same level, actively selling off foreign exchange reserves that have actually exhausted themselves. Over the past five years, the lira has fallen in price by 3.5 times.

One can understand the analysts of the Moody’s rating agency, who lowered the sovereign rating of the Turkish state to B2. The country's foreign exchange assets over the past period fell from $ 74 billion to $ 44.9 billion since the beginning of 2020. At the same time, the country's own assets of the foreign exchange reserves amount to only about $ 0.9 billion, since the remaining amount falls on the assets of the credit institutions. As a result, Turkey found itself in the international rating lists next to the poor in Rwanda and Uganda.

Some experts compare the current state of Turkey with the financial state of modern Venezuela or the USSR in the late 1980s, when spending on imports did not even partially cover the country's export revenues, leading to a huge imbalance in the entire financial system.

Considering that the external debt of the state is almost $ 100 billion, and the Central Bank of the country owes about $ 50 billion in swap transactions, acquiring currency on the foreign market, the state of affairs is depressing.

The deficit of trade and balance of payments of $ 1.85 billion, with which the country's economy ended July, suggests that in case of refusal to prolong international treaties, Turkey is in danger of default. The pandemic has closed several financial opportunities to improve the situation at once. The tourism business, which could have been hoped for in a different situation, was only partially loaded. Investors are fleeing the Turkish market, selling shares and other securities - in July alone, bonds worth $ 390 million were sold.

In this situation, the political reaction to the events on the part of the Turkish authorities is interesting.

The Turkish President accuses speculators of the depletion of the national currency, calling the actions of the rating agency an "economic war" against the country.

At the same time, attempts to find help from the allies, which the state has been making since spring, have not yet led to serious breakthroughs. The only major help was the financial cushion provided by Qatar - Turkey received a loan of $ 10 billion, increasing the swap line for the Turkish Central Bank to 15 billion. However, last year the key rate was changed by 1.5 percent, lowered to 8.25%. Such a strategy is considered by the world analysts to be ill-considered and politicized, although it reflects the strategy of the Turkish authorities in recent years.