TL ‘break­ing point’ for TRNC,

Cham­ber of Com­merce head lashes out at govern­ment for fail­ing to pro­tect the TRNC econ­omy

Cyprus Today - - FRONT PAGE - By KEREM HASAN Chief Re­porter

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

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