Late payments soars in Turkey due to economic downturn

Turkey's economy has entered a dynamic of permanent economic crisis. Every week a new macroeconomic indicator shows the feet of clay of the Eurasian nation. Despite this, the eyes of Turkish policy makers are more concerned about what is happening outside their borders. The conflicts in Libya and Syria, in which Turkey intervenes directly or indirectly, continue to focus the foreign agenda of President Recep Tayyip Erdogan. Meanwhile, this week a new fact has come to light that reflects the bad times that Turkish citizens are going through. The Union of Banks has revealed that in May there were 32.8 million people who accumulated personal loan debts amounting to 679.4 billion liras, according to the newspaper Al-Ain News. 

Rising unemployment, lack of economic growth and inflation have weighed on the expectations of Turks and caused delinquency to soar. The figure offered by the Union of Banks indicates that the Turks owed 132 billion more in May of this year compared to the same month last year. The number of Turks who went into debt to buy a home in May rose to 2.4 million, up from 18,000 a year earlier. Up to 27.2 million people took out consumer loans in May, an increase of 661,000 people compared with the same month last year. 

One of the main problems facing the Turkish economy is the lack of foreign exchange reserves in dollars. Turkey's central bank has less than $50 billion in its possession after losing $1.7 million in early July, according to Al-Ain News. According to the institution's weekly report, foreign exchange reserves in the first week of the month fell from $49.6 billion to $51.34 billion the previous week, reflecting the difficulties the Turkish currency is experiencing. 

The country's budget deficit has also increased as a result of the measures put in place to curb the coronavirus and has reached a record for the first half of the year of around 109.5 billion lire. This budget deficit occurs despite financial transfers received from the Central Bank, estimated at 41 billion lire.