Turkey plans to tap into $6.6 billion reserves

Turkish Treasury and Finance Minister Berat Albayrak attends a news conference in Istanbul, Turkey, on April 10, 2019. (REUTERS/Umit Bektas/File Photo)
Updated 14 May 2019

Turkey plans to tap into $6.6 billion reserves

  • Turkey’s budget recorded a 36.2 billon lira deficit in the first quarter of 2019
  • Turkey’s economy tipped into recession last year after the lira fell sharply

ANJARA: Turkey is working on legislation to transfer the Turkish Central Bank’s 40 billion lira ($6.6 billion) legal reserves to the government’s budget, three economic officials have told Reuters.

The country’s budget, the sources claimed, are much deeper in deficit than had been expected, prompting the move. It is unclear when a draft law would reach parliament, though one of the sources said it could happen “soon.”

Turkey’s economy tipped into recession last year after the lira fell sharply. The currency is now under pressure partly due to worries over the bank’s depleted foreign exchange reserves, meant to defend against another crisis.

Separate to foreign exchange reserves, “legal reserves” are what the central bank sets aside from profits by law to be used in extraordinary circumstances. At the end of 2018, they stood at 27.6 billion lira, according to the bank’s balance sheet data.

A second source with knowledge of the matter said last year’s “legal reserves” combined with this year’s amounted to the 40-billion lira figure, which was cited by all three people who spoke to Reuters.

“The Turkish Central Bank has around 40 billion lira in legal reserves. The transfer of this amount to the 2019 central administration budget was seen as suitable. This step aims at improving and strengthening the budget,” the second source said.

It remains unclear how much of the reserves would ultimately be transferred and what, if any, new requirements would apply to the bank.

Officials from the bank and the Treasury could not immediately be reached for comment.

The transfer would mark the second recent move by Ankara to tap the bank’s funds to boost its budget. In January, it transferred some 37 billion lira in profits to the Treasury three months earlier than scheduled.

“I do not remember the use of legal reserves before. This method came up to stop further deterioration of the budget,” the first source said.

“There needs to be legislation to transfer the bank’s legal reserves. The new legislation is planned to be presented to parliament soon.”

Turkey’s budget recorded a 36.2 billon lira deficit in the first quarter of 2019, according to Treasury and Finance Ministry data. The deficit is expected to reach 80.6 billion lira by the end of 2019, not taking the possible tranfer into account.


Japan’s Uniqlo pulls ad after South Korean fury

Updated 21 October 2019

Japan’s Uniqlo pulls ad after South Korean fury

  • South Korean and Japanese relationship is deeply strained by the legacy of Tokyo’s 20th-century expansionism
  • Seoul and Tokyo are currently locked in a bitter trade and diplomatic row stemming from historical disputes
SEOUL: Japanese retail giant Uniqlo has pulled a commercial featuring a 98-year-old US fashion figure from South Korean screens, it said Monday after it was accused of whitewashing colonial history.
South Korea and Japan are both US allies, democracies and market economies faced with an overbearing China and nuclear-armed North Korea, but their relationship is deeply strained by the legacy of Tokyo’s 20th-century expansionism.
The latest example is an advert for Uniqlo fleeces showing elderly fashion celebrity Iris Apfel chatting with designer Kheris Rogers, 85 years her junior.
The last line has the white-haired Apfel, asked how she used to dress as a teenager, innocuously responding: “Oh my God. I can’t remember that far back.”
But Uniqlo’s Korean arm subtitled its version of the ad slightly differently, reading: “I can’t remember things that happened more than 80 years ago.”
That would put the moment as 1939, toward the end of Japan’s brutal colonial rule over the Korean peninsula, where the period is still bitterly resented, and some South Koreans reacted furiously.
“A nation that forgets history has no future. We can’t forget what happened 80 years ago that Uniqlo made fun of,” commented one Internet user on Naver, the country’s largest portal.
The phrase “Uniqlo, comfort women,” in reference to women forced to become sex slaves to Japanese troops during the Second World War, was among the most searched terms on Naver at the weekend, and demonstrators protested outside Uniqlo shops on Monday.
Seoul and Tokyo are currently locked in a bitter trade and diplomatic row stemming from historical disputes, and South Korean consumers have mounted boycotts of Japanese products.
Uniqlo — which has 186 stores in South Korea — has itself been one of the highest-profile targets, while Japanese carmakers’ sales dropped nearly 60 percent year-on-year in September.
The company denied the allegations in a statement, saying the text was altered to highlight the age gap between the individuals and show that its fleeces were for people “across generations.”
“The ad had no intention whatsoever to imply anything” about colonial rule, a Uniqlo representative said on Monday, adding the firm had withdrawn the ad in an effort at damage control.
Analysts said the controversy demonstrated the politicization of the neighbors’ complex history.
The reaction was excessive, said Kim Sung-han, a former foreign affairs vice minister who teaches at Korea University, involving a “jump in logic” that “assumes everything Uniqlo does is political as a Japanese company.”
“I don’t see how her remark could be linked to the comfort women issue,” he added. “This is overly sensitive.”