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The Turkish government has announced a new “revenue-indexed” savings bond in an attempt to salvage the value of the lira, its failing national currency. (See “Turkey’s Economy Weakens Further Under Erdogan’s Policy” in this issue.)
Officials have given few details about the new bond, other than to say that it will offer a guaranteed minimum return.
In 2009 and 2010, the treasury issued revenue-indexed bonds with returns based on the financial performance of state-owned businesses, such as the national oil company and the airports management agency.
Profits at some government-owned entities have grown 70 percent so far this year over last, Turkish economic consultant Haluk Burumcekci told the Financial Times.
If the new bonds’ returns capitalized on that performance, the bonds could pay a higher interest than bank savings accounts and “attract attention,” he said.
However, with Turkey’s inflation rocketing at 73.5 percent in May, no savings account is likely to preserve depositors’ buying power.
The bond is the latest in a series of ineffective steps the government of president Recep Erdogan has taken to strengthen the lira, Turkey’s national currency, since it lost about half of its value against the dollar in recent years.
TRENDPOST: We have covered Turkey’s economy extensively. See some of our coverage in:
- “Turkey’s Central Bank Governor Fired After Rate Hike” (23 Mar 2021)
- “Turkey’s Financial Markets Crash After Agbal Firing” (30 Mar 2021)
- “Turkey: Interest Rates Down, Lira Crashing. War Next?” (19 Oct 2021)
- “Turkey’s Economy Continues to Implode” (14 Dec 2021)
The lira is down 22 percent this year and closed below 17.4 to the dollar on Monday, 13 June, under Erdogan’s insistence that low interest rates cure inflation.