In the midst of a pandemic, every country is trying to find their own way of dealing with the unprecedented challenges presented each day. As of 1 April 2020, total number of confirmed cases in the world is 911,308 with total number of deaths at 45,497 spread over 180 countries or regions. The fact is that the first cases were noted in China at the end of December 2019, only about four months ago. Of course, the initial challenge for the countries take the form of ensuring the safety and health of their citizens in the face of this pandemic affecting an exponentially increasing number of people; in almost all cases the burden of taking care of the health of people surpasses the capacities of national health systems of individual countries.

However, the impact of this pandemic does not stop there as we all experience on a daily basis. As a result of the measures like self-isolation and containment taken to contain the virus and to ensure the proper functioning of the health systems for those in need, individuals, companies and industries are struggling. National economies and the world economy started to suffer on a global scale since measures adopted cause disruptions on the global supply chains, the stock exchanges and the markets. These in turn trigger issues in relation to labour, social services and education and are calling for countries to come up with urgent solutions on a daily basis. This dimension of the crisis proves to be as challenging, if not more.

In Turkey’s case, there are a total number of 15,679 confirmed cases with a total number of 277 deaths, as of 1 April 2020. In terms of the total number of confirmed cases, Turkey ranks 10th in the world, according to the data from The Johns Hopkins Coronavirus Resource Center. Looking at the interactive daily coronavirus table on the Ministry of Health’s COVID-19 website, it can be seen that it took only about two weeks for the number of confirmed cases to go from 98 on 17 March 2020 to 15,679 on 1 April 2020 and this represents quite a steep curve.

Turkey began taking some preventative measures even before the first national case of COVID-19 has been announced on 10 March 2020. As early as 6 January, an Operation Centre has been set up within the framework of the Ministry of Health. Following that, a Science Council has been formed and Turkey started to draw up a ‘Guide for COVID-19’ in line with the flow of information coming from all over the world.  In the first stage, measures taken aimed at containing the coronavirus and preventing it from spreading which included stopping flights first from countries in Asia including China (Wuhan). Iran and Italy were also added to this list as the cases in these countries grew in numbers and the gravity of the situation increased.  Repatriation efforts of Turkish citizens from these countries have been coordinated between the Ministry of Foreign Affairs, the Ministry of Health and the Ministry of National Defence. In the beginning of March, people arriving from abroad were being advised to self-isolate and quarantine themselves for 14 days at home.

With the announcement of the first COVID-19 case in Turkey on 10 March, measures took a different turn and new restrictions have begun to be introduced gradually. Flights to and from more countries have been banned, day care centres, clubs have been shut down and schools and universities have been temporarily closed. Restrictions have been put in place regarding visitors for hospitals and prisons. National and international meetings, conferences, scientific activities and military exercises have been postponed. Cafés, restaurants, concert halls, theatres, gyms, museums, libraries and entertainment venues where people could come together in large numbers were next to be closed down. After the arrival of big groups of Turkish citizens from Umrah and then from European countries to and from which flights have been banned, the new rule of compulsory 14 days of quarantine in student accommodations designated by the Ministry of Youth and Sport began to be implemented.

To this day, more restrictions are being introduced every day. People over the age of 65 are banned to go out of their homes and people are banned from outdoor leisure activities, even exercising on the coastal areas of Istanbul. Intercity maritime lines carrying people to and from Istanbul have been cancelled and intercity travel by car and by bus is made conditional upon pre-approval by the authorities. Health checks have been set up entering and leaving every city and a number of villages have been put under quarantine all over Turkey. Banking hours have been limited to 12:00-17:00 in line with the other social distancing measures. Adoption of these measures relating to containment and the prevention of the spread of the coronavirus have been gradual rather than at once.

As for the economic and financial dimension of the pandemic crisis, the statement made by President Recep Tayyip Erdoğan on 18 March following the Coronavirus Assessment Meeting has been pivotal in announcing the relevant measures. These can be outlined under two categories; fiscal and monetary.

As stated in the press release by the Central Bank of the Republic of Turkey (CBRT), some monetary measures have been adopted with the aim to enhance predictability by providing banks with flexibility in TL and foreign exchange liquidity management; to offer targeted additional liquidity facilities to banks to secure uninterrupted credit flow to the corporate sector and to boost cash flow of exporting firms through arrangements on rediscount credits.

Within this context, the CBRT has adopted measures in relation to providing banks with as much liquidity as they need through intraday and overnight standing facilities; injecting liquidity to the market through repo auctions with maturities up to 91 days; increasing the liquidity limits of Primary Dealers in the framework of Open Market Operations (OMOs); giving the possibility of holding conventional swap auctions with maturities of one, three and six months against euros and gold as well as US Dollars; reducing FX reserve requirement ratios by 500 basis points in all liability types; offering bank targeted additional liquidity facilities to secure uninterrupted credit flow to the corporate sector- the amounts of funds the bank would receive being conditional on the amount of credit the bank in question has already provided or will provide for the corporate sector.

Also regarding rediscount credits for export and foreign exchange earning services, measures taken to mitigate the negative effects of the crisis include: extending the maturities for repayment of rediscount credits (this can postpone the repayment of rediscount credits corresponding up to USD 7.6 billion); offering an additional 12 months export commitment fulfilment time for the rediscount credits whose export commitment has not been fulfilled yet; and extending maximum maturities for rediscount credits to 240 days for short term utilisation.

On the fiscal side, 100 billion TL worth package of Economic Stability Shield has been announced by the President to help the economy. Within this context, withholding VAT tax and SSI premiums for the months of April, May, and June 2020 have been postponed for six months for those in retail, iron and steel and metal industries, automotive, logistics and transport industries, movies and theatres, travel and accommodation, food and beverages, textile and apparel. Accommodation tax will not be levied until November 2020. VAT which is currently at 18 percent for domestic airline transport will be brought down to 1 percent for three months. Repay instalments and interests payable on loans by firms whose cash flow is adversely affected by the recent measures will be postponed for at least three months and, if necessary, they will be provided with more financial support. Exporting firms will be given stock financing support in order to keep their capacity utilisation rates. Credit debts, capital and interest payments for April, May, June 2020 payable to Halkbank by tradesmen and craftsmen who declare that they are adversely affected by the crisis will also be postponed interest free for three months. Credit Guarantee Fund limit has been raised from 25 billion to 50 billion TL to support those SMEs who are in need of liquidity as a result of the recent developments. Minimum down payment for housing with a value of less than 500,000 TL will be brought down to 10 percent. The procedure for Short Term Working Allowance will be made easier and quicker. The minimum pension has been increased to 1,500 TL and the religious fest bonus for the pensioners will be paid in the beginning of April 2020. The Ministry of Family, Labour and Social Services will give a total of 2 billion TL  worth of  financial aid to those in need who meet the criteria set by the Ministry. A periodical follow-up programme has been set up to provide support to people who are over 80 years of age and who are living alone in their homes.

On the legal side, in order to ease the burden on the legal system, most bankruptcy and debt enforcement procedures have been halted until end of April 2020; legal notification procedures are postponed to the end of March 2020. Most tax administration and other procedures and title deed transactions will be processed either electronically or by post; deadlines for income tax declarations are to be extended; court cases will be postponed and mediation meetings will take place via teleconference.

New measures keep coming in order to offset the adverse effects of the pandemic on a global scale. Every country in Europe, like Turkey, is taking different precautions and measures they see as vital in their specific circumstances. EU has been taking some measures to keep the internal market moving smoothly, to help the firms and industries under distress due to the pandemic by activating escape clauses in relation to budgetary concerns, easing the State Aid rules to provide financial aid to industries as well as bringing together resources from Member States to redistribute them to those in greater need among others. However, it still remains to be seen whether EU will be able to act in unity on issues which matter most to keep the spirit of Europe. It also remains to be seen whether the world at large will be able to unite under the threat of the pandemic affecting the whole world.

Şehnaz DÖLEN, IKV Senior Researcher


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