Former CBRT chief economist calculates the bill for KKM: 'It caused an 850 billion TL loss'

AKP Chairman and President Recep Tayyip Erdoğan introduced the Foreign Exchange Protected Deposit (KKM) scheme as a 'new financial alternative' to prevent the currency crisis in 2021.

Although the dollar exchange rate, which was 18.62 TL before the KKM, showed a sudden downward trend after the KKM, the government's 'alternative' solution could not prevent the dollar exchange rate from rising.

Minister of Treasury and Finance Mehmet Şimşek announced that the KKM practice, which began during the term of former minister Nureddin Nebati, would end in 2024.

At the point reached today, the dollar has seen its highest level in history against the Turkish Lira, exceeding the 30 TL band.

"850 BILLION TL LOSS TO THE CENTRAL BANK"

Hakan Kara, former chief economist of the Central Bank of the Republic of Turkey (CBRT), calculated the loss of KKM to the Central Bank.

Sharing on his X (Twitter) account, Kara said, "I estimate that the Central Bank's loss (largely stemming from KKM) is around 850 billion TL. If KKM payments had remained in the Treasury, the budget deficit-to-GDP ratio would have been approximately 8.5 percent, the highest in the last 20 years."

Merkez Bankasının (büyük ölçüde KKM'den kaynaklanan) zararının 850 milyar TL civarında olduğunu tahmin ediyorum. KKM ödemeleri Hazine'de kalsaydı bütçe açığı/milli gelir yaklaşık %8,5 ile son 20 yılın en yükseği olacaktı. pic.twitter.com/6UgtidPJJJ

— Hakan Kara (@ali_hakan_kara) January 16, 2024

IT ALSO BECAME A BURDEN ON THE BUDGET

According to the report by Gerçek Gündem; according to the central government budget data announced by the Ministry of Treasury and Finance on Monday, 59 billion 870 million 556 thousand TL was transferred from the budget to the Foreign Exchange Protected Deposit last year, excluding conversions from foreign currency. While the entire transfer took place in the first 7 months of the year, the cost was announced as zero in the last 5 months. Thus, the total cost of KKM from March 2022 to date has reached the level of 152 billion 22 million 517 thousand TL.

News Source: 12punto