Turkey, Economy

Turkey's economic stability package acts like shield against pandemic

Turkey takes numerous measures to protect people, firms from economic impact of novel coronavirus pandemic

Gokhan Ergocun   | 11.04.2020
Turkey's economic stability package acts like shield against pandemic

ISTANBUL

Turkey recently introduced an economic stability package to shield individuals and firms against the economic impact of the novel coronavirus pandemic.

The country announced it would support salary payments, postpone loans and provide flexibility for taxpayers to protect markets amid the uncertainty caused by the outbreak.

Providing free healthcare services to all, Turkey is often cited as a model country in its response to the virus, including its distribution of face masks to all residents between the ages of 20 and 65 and mobilization of its security forces to help the elderly by doing their shopping and meeting their immediate needs.

Employees, pensioners

Turkey will continue to provide 75 Turkish liras ($11) per month for around 7.8 million minimum wage earners for 12 months.

Both the public and private sectors have taken measures for remote working or more flexible hours was started in an effort to keep more people in their houses.

The government also announced that for three months, it would pay 60% of the staff salaries of firms forced out of business due to a Force Majeure, such as the pandemic.

With this short-term employment allowance, the government said it would also make direct transfers -- within the range of 1,752 Turkish liras ($260) to 4,381 liras ($650) -- to employees' bank accounts.

It will also pay the salaries of personnel forced to take unpaid leave due to the outbreak.

Despite physical classes being canceled to prevent infection, public schools will continue to pay untenured teachers and qualified instructors, who normally receive hourly wages.

To help shield retirees from the outbreak's negative effects, the minimum pension was raised to 1,500 Turkish liras ($221), with bonus payments moved to earlier dates.

Upon request, public banks will also deliver payments to pensioners' homes.

Further, the government has started providing 4.4 million families in need with 1,000 Turkish liras ($148).

In the private sector, employees were allowed to benefit from compensation work for a total of four months, instead of two, during which they will be able to go on paid leave and compensate later in work hours.

For healthcare personnel, performance payments will be paid in maximum for three months as the country employs 32,000 additional staff for medical facilities.

Tax and other payments

The government announced that over two million taxpayers' value-added tax (VAT) and premium payments -- totaling some 53.6 billion Turkish liras ($7.9 billion) -- were postponed for six months.

Also postponed were the income taxes of 1.9 million who faced a Force Majeure, as well as the payments and declarations of taxpayers aged 65 and above.

Accommodations taxes, previously scheduled for this Summer, were also delayed until January 2021.

Easement and revenue share payments for renting hotel rooms were deferred for six months.

Separately, cuts in municipality budgets were postponed for three months, allowing access to 3 billion ($445 million) Turkish liras in additional funding.

The government has also provided flexibility for rental payments of properties owned by special provincial administrations, municipalities and their subsidiaries.

Banking

For their part, banks postponed principal and interest repayments of firms facing cash flow disruptions, and provide additional financing support.

Berat Albayrak, the Turkish treasury and finance minister, said on Monday that over tens of thousands of firms had applied for and received financial support.

State lenders announced a low-interest credit package of up to 10,000 Turkish liras ($1,477) for families with monthly incomes under 5,000 Turkish liras ($740). Millions of citizens applied for this loan and payments will commence next week.

Companies affected by the outbreak will be allowed access to loans on the condition that they retain employees.

Also, the country's banking watchdog provided flexibility for late loan repayment by companies.

In a measure to support exporters, banks will provide support funds for stocks, in order to protect their capacity utilization rate.

Another measure to bolster liquidity doubled the limit of the Credit Guarantee Fund, while the maximum credit viability rate for house loans was raised from 80% to 90% to support the construction sector.

Companies failing to meet financial obligations in April, May and June, were included under Force Majeure conditions.

The government-backed credit insurance limit was also raised from 25 million Turkish liras ($3.7 million) to 125 million Turkish liras ($18.5 million).

Albayrak said the government would help every citizen, firm or factory that needed support.

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