Erdoğan denies $128 bln went missing from Central Bank's FX reserves, says it got into circulation

Duvar English

President Recep Tayyip Erdoğan has denied that there's a gap in Central Bank's foreign exchange reserves, as he also slammed the main opposition Republican People's Party (CHP) for questioning the fate of the money. 

The CHP has been asking where the missing $128 billion dollars were spent as part of a political campaign that drew a harsh rebuke from the ruling Justice and Development Party (AKP). 

While no plausible explanation was provided on where the money went, Erdoğan accused the CHP of "trying to harm Turkey's reputation and credibility" with its "Where are the $128 billion?" campaign. 

"It didn't vanish or entered the pockets of certain people unlawfully," Erdoğan told members of his AKP during a weekly parliamentary group meeting on April 21. 

"This money and so much more got into circulation among the economy's actors and our citizens, meaning it was relocated. The majority of it stayed in the country," Erdoğan said. 

"Our people should rest assured that this country's $128 billion wasn't wasted or given to certain individuals. This campaign is a blatant attack and treason against the country and the people," he noted. 

According to Erdoğan, the amount that the CHP says is missing is also false.

"Neither the number is true, nor the meaning attributed to the number, nor the campaign pursued over this figure. Wrong from beginning to the end. Ignorance from beginning to the end," he said. 

Erdoğan claimed that the developments in the global economy in 2019 and 2020 forced the Central Bank to make significant foreign exchange transactions.

'2020 was a tough year for Turkey'

"Especially 2020 was a tough year both for the world and Turkey," he said, adding that financial measures taken by various countries to fight the COVID-19 pandemic totaled $16 trillion and budget expansions by central banks reached $10 trillion.

"This turbulent economic climate affected our country negatively, for sure," he noted, adding that the country's current deficit had widened while its income from tourism slipped, as tendencies among people to convert their savings into foreign currencies and gold also created additional demand. 

"During the last two years, $30 billion from the sources of the Central Bank were used to finance the current deficit," Erdoğan said, noting that foreign capital outflows had reached $31 billion.

He added that the demand of the real sector for foreign exchange to pay off their debts amounted to $50 billion, while regular people bought $54 billion worth of foreign currencies and gold as savings.

"As you can see, only four items yielded a figure of $165 billion," Erdoğan said, adding that this amount was used to finance the current deficit, real sector debt, foreign capital outflows and public needs.

He said that the reserves were used in meeting the demand of all parties for transactions that require foreign currency, from importers to investors, the real sector to the public.

"For a long time, our Central Bank hasn't been making these transactions through auctions, but through the market-maker banks working on a 24-hour basis to avoid midnight operations towards our country in Asian markets."

If the Turkish Central Bank had not met the demand for foreign exchange without hesitation, the situation would be far worse, Erdoğan claimed, citing Turkey's economic crises of 1994 and 2001.