Legislation

It was reported on Monday that the Treasury was crafting legislation to transfer the Turkish central bank’s 40 billion lira (6.60 billion dollars) in legal reserves to the government’s budget.

This is the latest unorthodox attempt to pull the country out of recession and help the ailing lira currency.

Last week, sources said that Turkish state banks had sold around 4.5 billion dollars, including a flurry of late selling on Friday to rein in the losses in the lira triggered by a decision to re-run Istanbul’s mayoral election.

On Friday, the pro-government Hurriyet said four legislative proposals would be presented to parliament after being finalised in a meeting attended by President Tayyip Erdogan.

It said parliament would pass the proposals and later focus on election campaigns for the June 23 re-run of the Istanbul vote.

The lira has come under renewed pressure in the past two months partly due to investor worries over the central bank’s depleted foreign exchange reserves and uncertainty over the fate of the Istanbul vote.

The central bank’s “legal reserves” are what it sets aside from profits by law to be used to defend against crises in extraordinary circumstances.

At the end of 2018, they stood at 27.6 billion lira, according to the bank’s balance sheet data.

The proposed legislative package is seen including energy sector loan restructurings, incentives in the tourism sector and paid military service, Hurriyet reported.

It is expected to be discussed at the Parliament next week.

Earlier this week, it was reported that Turkey’s plans to clean up some 13 billion dollars in bad energy loans.

This is one of the worst hangovers from last year’s currency crisis, was taking shape even as some banks hold out for the government to agree to safeguards and higher electricity prices.