TL ‘breaking point’ for TRNC,
Chamber of Commerce head lashes out at government for failing to protect the TRNC economy
A BUSINESS leader has warned of “dire consequences” and possible social unrest if the TL plummets further and reaches 7.50TL to the UK pound.
Chamber of Commerce president Turgay Deniz also lashed out at the TRNC government for failing to protect the country’s economy, and warned that the pound sterling reaching 7TL would be a “breaking point”.
Mr Deniz spoke to Cyprus Today as the TL plunged to a record low against the pound at midday on Tuesday when it was trading at 6.64TL, while it was 5.91TL against the euro and 5.04TL against the US dollar, although it later strengthened. TL selling rates yesterday were around 6.37TL to the pound, 5.65TL to the euro and 4.83TL to the dollar, according to the TRNC Central Bank.
“There will be dire consequences if the value of the TL drops further without any effective government measures,” warned Mr Deniz.
“Although the TRNC economy is based on the TL, it is very much dependent on sterling. Property, some taxes, rent and prices of vehicles are all indexed to the British pound, although salaries in the country are based on the TL.
“If the pound reaches 7.50TL, it will be very dangerous because it could lead to social unrest. Ordinary people will be unable to meet the cost of basic necessities. If the pound reaches 7TL this will be a breaking point for the TRNC and should set alarm bells ringing.
“I do not want to say that there will be a disaster, but the government has failed to take concrete measures concerning the TL devaluation. The government needs to implement reforms and use the 950 million TL Turkey has given for that.
“Secondly, bureaucratic obstacles need to be demolished. There are 42 different actions needed for a quality investor to complete, while the same procedure is done in Turkey in just two hours. A unit at the Prime Ministry should be set up for such requirements. We want a one-stop shop that deals with all the requirements and which slashes red tape.
“Thirdly, the government needs to fix foreign currency rates at Customs in order to act as a buffer and prevent imported goods and produce from going up in price. We been asking the government to do this for three months, but they have not.
“For rent, we asked for a stoppage tax to be slashed to 5 per cent if rent is charged in TL and 15 per cent if it is in foreign currency, giving an incentive to landlords to use the TL.”
Leading economists say the reason for the latest dramatic TL descent was because the Turkish Central Bank decided against expectations on Tuesday to keep interest rates at 17.75 per cent. The TL began to plummet immediately after the decision was announced at 1pm.
Ahmet Melih Karavelioğlu likened the Turkish bank to “accident and emergency” in “fighting inflation”, but said the “patient” needed a “doctor”, while Erdal Güryay warned of tough times ahead, especially in the TRNC which was “much more connected to foreign currency”.
TRNC Consumers’ Association chairman Hasan Yılmaz Işık predicted that the weaker TL against the pound would increase the price of electricity — which has already seen a 30 per cent price hike — and fuel.
“This will cause a chain reaction of inflation across the board”, he warned.
Chamber of Commerce president Turgay Deniz