International rating agencies have been making intense efforts to create a pessimistic view of Turkey’s banks, Treasury and Finance Minister Berat Albayrak said on Friday, but added that the government vowed to stand by its financial institutions, Reuters reported.
Speaking at a gathering of small to mid-size businesses, Albayrak also said Turkey was going to continue to take steps to support and protect its currency.
Ratings agency Moody’s sounded more alarm about Turkey’s banking sector on Tuesday, downgrading 20 financial institutions and citing the increased risk of deterioration in funding.
The comments from Moody’s are the latest to highlight the risk to Turkey’s banking sector from an ongoing currency crisis. It said the operating environment is now worse than previously expected.
The country has been facing a currency crisis since May, when President Recep Tayyip Erdoğan went to London to meet with global finance managers, signaling a tight grip on the economy and an insistence on low interest rates.
After the presidential and parliamentary elections of June 24, Erdoğan’s decision to appoint his son-in-law Albayrak as treasury and finance minister led to more losses in the Turkish lira’s value.
In early August the US sanctioned two Turkish ministers over a court decision to put American pastor Andrew Brunson under house arrest after almost two years of incarceration on “terrorism” charges.
Turkey’s economy management has been struggling to increase the value of the lira, as following the US sanctions, the lira plunged briefly at 7.20, a historic low, against the dollar. The national currency has lost almost 50 percent of its value since the beginning of this year.
On Friday, Turkey has lowered the level of withholding tax on lira bank deposits of more than one year to zero from 10 percent, while raising the tax level on foreign currency deposits of up to one year, Reuters reported, citing the Official Gazette.
It said the withholding tax on deposits of up to one year was cut to 3 percent from 12 percent and the tax on deposits of up to six months was cut to 5 percent from 15 percent.
The tax on forex deposits of up to one year was raised to 16 percent from 15 percent. The changes will be in effect for three months, it said.