Turkey's central bank revealed a staggering loss of 818.2 billion lira ($25.25 billion) for the year 2023, according to a recent disclosure published in the Official Gazette on Sunday. This substantial deficit was primarily attributed to the repercussions of the "KKM" foreign exchange-protected deposit scheme.
Introduced in 2021 amidst a severe currency crisis, the KKM scheme aimed to mitigate the impact of currency devaluation by incentivising citizens to deposit funds in lira rather than seeking refuge in more stable currencies or assets like gold. However, the scheme ultimately incurred significant losses, prompting Turkey's central bank to forego distributing profits to the Treasury for the fiscal year.
Over the past months, the government has been actively working to phase out the KKM program. The central bank's decision to prioritise the conversion of KKM deposits to conventional lira accounts underscores its efforts to stabilise the banking system and restore confidence in the national currency.
An independent audit conducted last year highlighted contrasting financial outcomes for the central bank, with profits of 72 billion lira in 2022 and 57.5 billion lira in 2021. This sharp decline in financial performance underscores the challenges posed by the volatile economic landscape and the need for strategic interventions to safeguard financial stability.
To address the ongoing financial challenges, the central bank will convene its general assembly on April 30 in Ankara to review and deliberate on the outcomes of 2023. With a renewed focus on promoting lira deposits and implementing corrective measures, Turkey aims to navigate through turbulent economic waters and foster sustainable growth in the coming years.
(Source: Reuters)