Turkey facing the prospect of bankruptcy

Mahmud al-Batakoshi

The coronavirus is hitting the Turkish economy hard. This comes to compound the economic deterioration Turkey suffered before the emergence of the coronavirus crisis, because of the misguided policies of Turkish President Recep Tayyip Erdogan and the multiple wars in which he implicated his country.

Coronavirus

Turkey had to impose a lockdown because of the coronavirus. This has caused the Turkish lira to lose value against the U.S. dollar, standing at 7 liras a dollar now.

Turkey has become a high-risk country for investors because of the suspension of production and the rise in unemployment.

The government is also incapable of collecting taxes. Turkey has to repay $168.5 billion in debts by February of next year at most.

Collapse

The Turkish economy is collapsing, according to official figures. This economy is in for tough times, given the suffering it had been going through before the coronavirus crisis.

The coronavirus crisis has affected all sectors of the Turkish economy, especially the tourism sector. The sector expects to witness recession over the next year. Turkey had plans to receive 60 million tourists this year. It also hoped that returns from the tourism sector would buoy up the economy.

In 2019, over 52 million tourists visited Turkey. This brought the country $34.5 billion in revenues. This amount of money shored up national revenues and effected a partial economic recovery, which partly compensated the 2018 collapse of the Turkish lira.

The Turkish government had hoped that tourism revenues would rise to $40 billion this year.

Recession, inflation

The economic recession Turkey is going through has led to a rise in the price of fuels. The price of gasoline rose two times in the last two months.

This came as exports fell down in a noticeable manner and foreign currency reserves at the central bank continued to decline.

In early March, the reserves were $75 billion. However, they are $52.7 billion now.

Economists expect, meanwhile, the foreign currency reserves to be totally depleted by June.