Turkey, inflation and Turkish Lira

Government to cancel debts of 6 million citizens

The Turkish State will assume debts of 1,650 million euros from low-income citizens, within the aid plan against inflation.

The Turkish government plans to cancel the debts of some 6 million citizens for a total value of 30 billion liras – about 1,6 billion euros – as part of the aid that the Erdoğan government has launched to help the most disadvantaged population that is suffering the most from the effects of inflation, which is already around 80% in Turkey.

As reported a few days ago by Turkish media, the Ankara executive will include in the debts to forgive unpaid utility, telephone, water, electricity or natural gas bills, among others. Turkey’s Treasury and Finance Minister, Nureddin Nebati, has assured that the government will be able to carry out this measure without charge to the State budget, which will require ad hoc legislation that must be approved by parliament, once it resumes its activity after the summer.

To achieve this, the creditor companies that have already filed a lawsuit before courts must record the debts as expenses in their accounting books, and deduct them from the taxes to be paid to the Public Treasury, so that said debts will be assumed by the State. Also, cases already brought before courts will be annulled.

The plan includes cancelling the debts remitted to the courts worth up to 2,000 liras – about 110 euros – of some 5 million Turkish citizens, as well as those debts of up to 2,500 liras – about 140 euros – that have been transferred to financial and debt management companies.

The cancellation of the debts of millions of low-income Turkish citizens is part of the executive’s plans to combat the growing cost of living due to factors such as the economic crisis, inflation, or the devaluation of the lira, which is seriously undermining the purchasing power of the lower classes. These plans also include the reduction of taxes on the most basic foods, the limitation of the annual rise in rental prices to 25%, and massively build thousands of public houses in an attempt to stop the escalation of housing prices.