Saving the economy

A new law introduced at the parliament unveils a package to

prop up the economy

The ruling AK Party has prepared a 71-item bill containing new regulations for the economy. Its aim is to enact a TRY 1.1 billion package before the beginning of the year. The proposal includes the establishment of a Committee on Financial Stability and Development, a key element in the 100-day Action Plan. The Committee will carry out activities necessary for the financial system to support economic growth and maintain trust in the market, such as managing systemic risks, ensuring compliance with financial regulations and practices, increasing coordination with the real sector and collecting the data needed in a centralized way. It will operate under the Ministry of Treasury and Finance. In the event that the Financial Stability and Development Committee determines a negative development that can infect the entire financial system, the President will be authorized to determine measures beyond member institutions’ authority. Some prominent regulations in the proposal are as follows:

• Revenue generated by wealth finance funds from transactions in capital markets will be exempt from bank and insurance transactions tax.

• The VAT refund practice, which will be charged due to construction expenditures in manufacturing industry investments, will continue in 2019.

• Tendered and ongoing contracts may be terminated or transferred within 60 days after the date of entry into force of the regulation due to unexpected increases in manufacturing input prices. In this case, the restrictions and sanctions arising from termination and transfer will not be applied.

• Turkish Reinsurance A.S under the Ministry of Finance and Treasury will be established to provide insurance and reinsurance coverage in order to compensate ficnancial and physical damages that may be incurred as a result of various risks that may not be covered within the country or where there are difficulties to do so.

• Public economic enterprises will be able to lend money to each other in line with the objectives of the annual general investment and financing program.