RECORD LOW TL HITS ECONOMY
Taken from this weeks issue.
By KEREM HASAN / Chief Reporter
SMALL businesses and charities in North Cyprus are on the brink of “bankruptcy” due to the plummeting value of the Turkish lira and the ongoing effects of the Covid-19 pandemic, leading figures have warned.
The TL fell to new lows this week against the British pound, US dollar and the euro.
The pound was yesterday trading hands for almost 11.2TL, while the euro had passed the 10TL mark. A dollar was valued at around 8.5TL. Ten years ago one pound was worth just 2.25TL. One Turkish lira is now equivalent to around 9p.
Speaking to Cyprus Today, Cyprus Turkish Chamber of Industry president Candan Avunduk said: “Between 40 to 60 per cent of small businesses will be pushed to the edge of bankruptcy because of the record-breaking devaluation of the TL and due to global developments, such as the uncertainty stemming from the pandemic that has caused a major fall in tourist numbers.
“The fact that property prices and service prices are based on pound sterling in a country where incomes are in Turkish lira is the cause of this problem.
“We have created this problem ourselves and have failed to address it. Every time the pound appreciates against the TL, we become concerned about how the average earner in North Cyprus will be able to pay their rents, which are set in foreign currency, and afford a trip to the supermarket. People’s purchasing power will be further slashed.
“Another problem is that, irrespective of the TL depreciation, the price of Brent crude oil fell from $70 [a barrel] to $19 at one point due to the low demand because of the pandemic, although it has since increased to about $40 per barrel.
“However, this [overall price fall] has not been reflected in the price of our fuel and electricity bills, bearing in mind that our power plants run on fuel oil.
“Why isn’t the price of raw materials being dropped in North Cyprus? There needs to be concrete action by the government to enforce tough measures to stop shop owners from taking an opportunist approach to increasing the prices of goods on the shelves.”
Asked whether such a move would be an “intervention” in a free market, Mr Avunduk replied: “This is not an intervention, this is regulation of the free market based on the realities of the country to help protect the public and [reduce] inflation.
“The economy is already facing difficulties due to an absence of tourists and international students because of the pandemic.
“The TRNC needs to approach Turkey for [economic] assistance because we cannot print our own money. We also need to take a fresh approach to the EU through longer vision planning to end the embargoes and allow us to trade. All of this is hurting our economy and the public.”
Cyprus Turkish Consumers’ Association head Hasan Yılmaz Işık, said: “There is no government in office to take measures. We will be making a call for a ban to be imposed on people taking out loans in foreign currency.
“We are also planning to start a new campaign calling for a boycott by consumers of red meat, which has surpassed 100TL per kilo because producers and shops are using the TL devaluation as an opportunity to increase the price of red meat.
“We also call for the [value of] rent agreements based on foreign currency to be fixed to the date the rental contract was signed, or for a legal obligation to be imposed for such agreements to be made in Turkish lira.”
Also speaking to this newspaper, Cyprus Turkish Contractors’ Union president Cafer Gürcafer said: “Local property buyers will be unable to get on the property ladder as their incomes make it very difficult to afford properties priced in foreign currency. However North Cyprus will become even more appealing to overseas property buyers because they will have a strong foreign currency income.
“We are waiting for the new government to be formed, and to put forward comprehensive projects aimed at increasing the supply of social housing to enable people to get on the property ladder.
“Either the [government] boosts people’s purchasing power, which at present is difficult, or you help people to get onto the property ladder by way of different schemes and social housing projects.”
Mr Gürcafer said an “ordinary” apartment in Lefkoşa costs about £25,000 to build but is sold for between £70,000 to £90,000 depending on its size and location.
Charities are also feeling the squeeze due to the “double whammy” of the pandemic and falling value of the Turkish lira.
Help Those with Cancer Association (Tulips) fundraiser Sue Tilt said: “All imported [cancer] drugs come from Turkey and are priced in foreign currency.”
“Patients’ costs are increasing because all our fundraising is done in TL. The fact that TL salary earners are more hard-up and business is down is due to Covid-19 . . . has had a major impact on our donations. I don’t know how the locals are able to cope.
“What has kept us afloat during these months has been the expats, who have mainly retired here and have a pension or [other] income in the sterling.
“The problems caused by the pandemic and the TL depreciation are a double whammy. . . We are struggling to keep everything going.
“In fact, during the lockdown period, our chairman Raziye Kocaismail was on the verge of closing down the whole organisation.”