Statement from Minister Nebati on KKM

In a statement he made on his social media account, Minister Nebati stated that the budget cost of the KKM application, which has reached a total of 2.3 trillion liras, continues to decrease and said, “The total cost to the budget has been realized as 95.3 billion liras. With the removal of the interest rate upper limit, it is not expected that it will create a serious cost on the budget in the coming period.” Minister of Treasury and Finance Nureddin Nebati said in a statement he made on his Twitter account that the total cost of the KKM to the budget is 95.3 billion liras and that they do not expect it to create a serious cost on the budget in the coming period. In his statement, Nebati said, “It should never be forgotten that there is a strong will and a national strategic mind behind our being able to realize the century-old works and services that we have provided to our nation so far. The strong economic infrastructure that we have built step by step during the period we have been in power and that has reached the maturity to quickly recover from global and local economic shocks and to put forward proactive solutions is a result of the climate of political stability. It is this steel-fused integrity that left its mark on the century and formed the vision for Turkey. As it is known, just as our AK Party governments under the leadership of our President have been able to reduce the share of interest expenses in the budget from 43.2 percent in 2002 to 10.6 percent today without ever compromising budget discipline; just as they have been able to provide our country with century-old works and services thanks to this fiscal space they have created; they also provide positive contributions to our economy with innovative instruments such as Exchange Rate Protected Deposit and Participation Accounts (KKM). “Contribution was made to stability in exchange rates” Noting that the KKM application was put into effect as a result of the panic and high volatility created in the foreign exchange markets at the end of 2021, Nebati said, “Thus, the panic atmosphere in the period in question was eliminated, the share of foreign exchange deposit accounts in total deposits was significantly reduced, and contribution was made to stability in exchange rates. In addition, the maturity mismatch in the banking sector has also been reduced as the KKM has contributed to the extension of the average maturity of TL deposits. Today, the budget cost of the KKM application, which has reached a total of 2.3 trillion liras, has continued to decrease and has amounted to 95.3 billion liras in total. With the removal of the interest rate cap, it is not expected to create a serious cost on the budget in the upcoming period.” Nebati continued his words as follows: If the KKM application had not been put into effect and the increase and fluctuation in the exchange rate had continued as is; this would have had a high negative impact on our country’s external debt stock and the development of real markets would have been significantly disrupted. Moreover, this situation would have coincided with a period when sharp increases in commodity prices were experienced due to the triggering of the Russia-Ukraine War and when global financial conditions were becoming increasingly tight. Under those conditions, the costs of the real sector in our country would have increased much more in energy and all other imported inputs and our real sector would have been faced with the problem of borrowing more at high costs in the current global financial environment for the additional foreign exchange need that arose.”