Turkey ‘will run out of dollars by July’, economists warn

Turkey ‘will run out of dollars by July’, economists warn
An aerial view taken on May 2, 2020 shows the Galata tower (C) and the Beyoglu district in Istanbul, during a three-day curfew to prevent the spread of the COVID-19 disease, caused by the novel coronavirus. (AFP / Ozan Kose)
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Updated 03 May 2020

Turkey ‘will run out of dollars by July’, economists warn

Turkey ‘will run out of dollars by July’, economists warn
  • Central bank burns through billions protecting lira
  • Coronavirus to cost $25 billion in lost tourism revenues

ANKARA: Turkey is burning through its reserves of foreign currency in a futile attempt to prop up the collapsing lira, and may run out of US dollars by July, economists told Arab News on Saturday.

President Recep Tayyip Erdogan is also facing a double economic challenge from the coronavirus pandemic — the soaring cost of lockdowns and movement restrictions to curb the spread of the virus, and the fact that COVID-19 will prevent the usual summer tourist boom.

The Turkish lira has lost 14 percent of its value since January, and about 36 percent over the past two years. Last week it plunged past the psychologically significant level of seven to the US dollar.

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In response, Turkey’s central bank has supplied $32 billion in foreign reserves for state banks to support the lira in the first four months of this year, the same as the whole of last year. 

The central bank’s own hard currency reserves fell to $25.9 billion in mid-April from about $40 billion at the start of the year.

One foreign exchange trader estimated that the central bank’s reserves fell into negative territory last week, by $2 billion. “No country can withstand such rapid reserve losses for a long time,” the trader said.  

Analysts at TD Securities have estimated that Turkey may run out foreign currency reserves as early as July if the pressure on its currency keeps intensifying




A lightning strikes over the Bosphorus in the night in Istanbul on May 2, 2020. Analysts warn of dark skies ahead as the soaring cost of lockdowns and movement restrictions to curb the spread of the virus take their toll on the economy. (AFP photo / Bulent Kilic)

Central bank governor Murat Uysal has admitted that the COVID-19 pandemic has produced “extraordinary conditions” in which there may be volatility in the bank’s financial buffer. But Wolfango Piccoli, a political risk analyst at Teneo Intelligence in London, said the bank’s policy was unsustainable because it had insufficient resources left to manage the downturn.

“Even if it manages to get swap lines from the US Fed, that would only give some time, but will not fix the ongoing financial problems,” he told Arab News.

“And these swap lines will be of very limited amount, and are unlikely to provide a significant breathing space for the currency.”

Piccoli said Turkey’s monetary and fiscal policies lacked credibility in the eyes of markets, and attempts by the central bank to sustain the lira make that lack of credibility even worse.

Turkey is also facing the collapse of its tourism industry. The central bank’s latest annual inflation report projects that “the loss in tourism revenues will bring important reflections on growth, employment and the current accounts balance.”

Loss of tourism revenues for the remaining three quarters of the year may reach $25 billion. 

Experts also note that about two-thirds of these tourism revenues are collected in the summer months, which will be also a “lost period” because of the continuing effects of the coronavirus pandemic.


Lebanon approves law to import vaccines as coronavirus hits new record

Lebanese Parliament Speaker Nabih Berri heads a legislative session, as Lebanon's parliament approved a law that paves the way for the government to ink deals for coronavirus vaccinations, at UNESCO Palace in Beirut, Lebanon January 15, 2021. (Reuters)
Lebanese Parliament Speaker Nabih Berri heads a legislative session, as Lebanon's parliament approved a law that paves the way for the government to ink deals for coronavirus vaccinations, at UNESCO Palace in Beirut, Lebanon January 15, 2021. (Reuters)
Updated 15 January 2021

Lebanon approves law to import vaccines as coronavirus hits new record

Lebanese Parliament Speaker Nabih Berri heads a legislative session, as Lebanon's parliament approved a law that paves the way for the government to ink deals for coronavirus vaccinations, at UNESCO Palace in Beirut, Lebanon January 15, 2021. (Reuters)

BEIRUT: Lebanon’s parliament approved a draft law allowing imports of coronavirus vaccines as the tiny nation hit a new record in case numbers Friday and more hospitals reported they were at full capacity.
The new daily toll of 6,154 cases and 44 deaths came on the second day of a nationwide 11-day curfew that the government and doctors hope will reign in the dramatic surge of the virus.
Lebanon, a country of about 6 million people, has witnessed a sharp increase of cases in recent weeks, after some 80,000 expatriates flew in to celebrate Christmas and New Year.
During the holiday season, restrictions were eased to encourage spending by expatriates amid a suffocating economic and financial crisis, the worst in Lebanon’s modern history.
On Friday, the American University Medical Center, one of Lebanon’s largest and most prestigious hospitals, said in a statement that its health care workers were overwhelmed. The hospital’s ICUs and regular coronavirus units have reached full capacity and so did the emergency room, it said.
“We are unable to find beds for even the most critical patients,” the hospital said, urging people in Lebanon to help by taking extreme precautionary measures to “overcome the catastrophe we are facing.”
Mazen El-Sayed, an associated professor in the department of emergency medicine, described the situation as “tragic,” anticipating that the next two weeks would be even more dire.
In southern Lebanon, the Ragheb Harb Hospital also said that its COVID-19 units were now. “We are working beyond our capacity. The situation is very dangerous,” the hospital said in a statement.
The curfew, which began Thursday, is the strictest measure Lebanon has taken since the start of the pandemic. But many have expressed concern the measures have come too late — many hospitals have already reached maximum capacity for coronavirus patients, some have run out of beds, oxygen tanks and ventilators while others have halted elective surgeries.
Lebanon was able to contain the virus in its early stages but the numbers started climbing after measures were eased in early July and following the massive deadly blast at Beirut’s port in August.
Following bureaucratic delays, the country now is putting hopes on vaccines that are expected to start arriving next month.
Parliament’s approval opens the way for imports of vaccines from around the world, including the Pfizer-BioNTech vaccine.
Health Minister Hamad Hassan, who is hospitalized with the coronavirus, had said that once the draft law is approved, the first deliveries of vaccines should start arriving in February.
Lebanon has reserved 2.7 million doses of vaccines from multiple international companies and 2.1 million to be provided by Pfizer, Diab’s office says.
Lebanon has registered nearly 243,000 coronavirus cases and some 1,825 confirmed deaths.