Hundreds of thousands of businesses and individuals with tax obligations to the Turkish state have received foreclosure notices this week informing them about their frozen bank accounts. The government of Turkey, which is struggling with financial and economic problems under geopolitical pressure, is likely to push even more of its citizens towards cryptocurrencies with the move that comes instead of the promised help to restructure the debt.
Millions of Taxpayers Receive Foreclosure Notices
Around 2.5 million taxpayers who have not been able to pay their debts and another 800,000 companies and persons owing money for social security expenses have received the notices on Monday, Turkish outlet Sözcü Gazetesi reported quoting the tax expert Nedim Türkmen. The total debt of both groups amounts to 150 billion Turkish lira (over $26 billion). According to the publication, all Turkish accounts of the 3.3 million debtors have been affected.
The foreclosure notices were sent just as Turkey’s Finance Minister Berat Albayrak announced a new government economic program. In his presentation, Albayrak didn’t mention anything about supporting those who are unable to cover their overdue arrears to the state. That’s despite an earlier statement this summer in which he hinted of a possible government aid. “Tax and debt restructuring requests are coming in. Steps can be taken to suit different needs in different periods,” the minister said in July.
His comments received a positive response from the Turkish business circles at the time, as he also noted that the necessary steps should be taken as soon as possible. But his latest address did not contain any reference to debt restructuring. What’s more, Türkmen pointed out that the bank accounts now have been frozen at a very inappropriate moment, when many companies were preparing to pay monthly salaries. He believes tax agents won’t find much in many of them but will cause businesses to go bankrupt.
During an annual presentation of economic forecasts, Berat Albayrak said authorities in Ankara have made “innovative steps” that would allow Turkish banks to start lending again and urged financial institutions to take a “proactive role” in extending credit. “We will see the beginning of a clean slate for banks in the upcoming period. We think they will return to providing financing,” said the cabinet member, as quoted by Reuters.
Ankara Forgets a Promise to Help Debtors
Albayrak was referring to the government’s recently issued directive for banks to reclassify around 46 billion lira in debt ($8.2 billion) as non-performing loans, many of which resulted from the 2018 crisis with the nation’s fiat. Last year, the Turkish lira lost a third of its value. The drop left many local businesses unable to service their credits in foreign currencies. In August, the bad loans held by Turkish banks totaled approximately 124 billion lira, or almost $22 billion according to exchange rates at the time of writing.
The popularity of cryptocurrencies has been growing exponentially in Turkey and last year’s currency crisis coupled with high inflation pushed even more Turks to seek refuge in decentralized digital money. A 2019 study exploring how common cryptocurrencies are around the world placed the country at the top of the chart, with a fifth of the Turkish respondents declaring they own crypto.
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Do you expect more Turkish citizens and businesses to start using cryptocurrencies following their government’s offensive against taxpayers who owe money to the state? Tell us in the comments section below.
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