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Turkey plans to write off nearly $1.6bn of debt under draft law

REUTERS/Dado Ruvic
The budget recorded a deficit of 202.8 billion lira in January-February period while primary deficit stood at 147.2 billion lira

A Turkish parliamentary commission began discussing on Thursday a draft bill that would write off nearly 30 billion lira ($1.61 billion) of debt, according to an impact report.

Under the draft prepared by President Tayyip Erdogan’s AK Party (AKP), the government will waive nearly 27 billion lira of debt used for student housing, as well as 2.7 billion lira in fines issued during the COVID-19 pandemic, the report showed.

Ankara will also forego some 2.2 billion lira of revenue as a result of tax reductions for some employers on aid for electricity and natural gas, according to the report prepared by the AKP for the commission.

The report also showed a government scheme that protects lira deposits against forex depreciation had led to 18.8 billion lira of tax-related costs since it was launched in December.

Separately, it will cost the treasury 416 million lira to meet unpaid debt below the amount of 2,000 lira that asset management companies took over from banks because they were non-performing or fell under enforcement proceedings.

Erdogan vowed last week that the central bank would continue to cut its policy interest rates every month for as long as he stayed in power, after it surprised markets by cutting rates twice in the last two months.

“As long as this brother of yours is in this position, the interest will continue to fall with each passing day, each passing week, each month,” he told a rally in the western province of Balikesir.