Turkish cbank valuation account tumbles

Bankers concerned funds maybe transferred to govt coffers

ANKARA, Nov 23, (RTRS): A so-called valuation account at Turkey’s central bank has fallen by a third over the last month, prompting concerns among some bankers that the bank may transfer some of the funds to government coffers.

The account was worth 47.2 billion lira as of Nov 20, according to the analytical balance sheet published on the central bank’s website, down from 69 billion lira a month ago.

Reuters, citing a person with knowledge of the matter, reported last month that Ankara was working on transferring some 100 billion lira ($17.5 billion) from the valuation account to the Treasury.

Such a fund transfer would mark Turkey’s latest step to lean on the central bank to shore up its budget deficit, which has widened this year.

Central bank governor Murat Uysal said earlier this month such a plan did not exist. The central bank told Reuters on Friday there was no change in how it operated the valuation account.

The valuation account contains unrealised gains and losses arising from the revaluation of foreign currencies, gold and other assets and liabilities, based on price changes of the lira and gold on international markets.

It has proven volatile due to sharp moves in the Turkish lira, which lost as much as half its value in a crisis last year. The account was worth 45 billion lira at the end of 2018, and 55 billion lira at the end of 2017.

“We see inexplicable changes in the balance sheet, and we had seen similar changes in the transfer of contingency (legal) reserves. We interpret this as a preparation to transfer (funds) to the Treasury,” said a banker who requested anonymity due to the sensitive issue.