Turkish citizens are set to be offered the most comprehensive restructuring package yet, reports said Friday, allowing them to restructure various types of debt, from water bills to insurance premiums.
The reports by broadcaster NTV and other Turkish media outlets come as Türkiye heads for parliamentary and presidential elections, which President Recep Tayyip Erdoğan indicated could be held on May 14 after he said the date should be brought forward from June 18.
The government tripled the minimum wage in the past year, raised state salaries and hiked pensions for millions to ease the economic pressure on households, driven by stubborn inflation.
Consumer prices in Türkiye have moderated over the last two months after hitting a 24-year high in October and inflation in December decelerated at its steepest pace in more than a quarter century.
Annual inflation fell to 64.27% last month from the 84.39% reported in November. The decline was driven mainly by the so-called favorable base effect and marked a second straight fall after inflation hit a peak of 85.5% in October.
The decline is expected to become more pronounced in the first quarter of this year and is expected to drop to as low as 40% by mid-2023.
The minimum wage has been increased by 55% for 2023 and Erdoğan also announced a measure that would allow more than 2 million people to retire early. He said the minimum wage may be hiked again throughout the year if necessary.
The new debt restructuring package will be the "most inclusive in the history of the republic," NTV reported, without citing a source, adding that it will be discussed at a Cabinet meeting on Monday.
The package will cover debt before Dec. 31, 2022, including tax debt, insurance premiums, legal and administrative fines, student housing loans, motorized vehicle tax, traffic tickets, unpaid road tolls, customs fines and others, NTV said.
It said those who are indebted to municipalities or have unpaid water bills or student loans would also be included in the package.
Large parts of the interest on the principal loans and interest due to delayed payment will be erased, and people will have the option to pay upfront or use a payment plan.
Those who pay upfront could have 90% of their debt erased, while debt under a certain amount may be erased altogether, NTV added.
It said that the package is expected to become law by mid-February at the latest.
The government has endorsed low interest rates to boost exports, production and investment and create new jobs as part of an economic program, eventually aimed at lowering inflation by flipping the country’s chronic current account deficit to a surplus.
Last year, the country’s central bank slashed its benchmark policy rate by 5 percentage points to 9%, citing the signs of economic slowdown. It held the key policy rate unchanged in its first meeting of the year on Thursday.
Erdoğan says high rates cause inflation and has said the government’s new economic model is expected to yield results in the new year.
The government last year introduced several relief measures to help cushion the fallout from inflation, including a cap on rent increases, reduced taxes on utility bills and the unveiling of a major housing project for low-income families.