Some TL 100 billion ($5.32 billion) in payments is expected as part of Türkiye’s restructuring of public debt worth TL 1 trillion under a draft law, an impact analysis report submitted to a parliamentary commission showed on Tuesday.
The restructuring package will allow individuals and companies to catch up with unpaid tax and social security debts, a move seen as one of a string of the government’s eye-catching measures promised ahead of the elections.
The analysis showed tax offices will be able to collect TL 43.5 billion from some TL 521 billion receivables, while the social security institution is expected to collect TL 47.8 billion from TL 196 billion outstanding as part of the law.
The draft law includes scrapping public debt below TL 2,000, meaning public institutions will give up collecting some TL 4.6 billion, according to the analysis.
Last week, President Recep Tayyip Erdoğan announced the planned draft and said it will enable the restructuring of debt to tax offices, customs offices and municipalities. It will let individuals and companies pay outstanding debts in installments after restructuring at a certain rate, he added.
The announcement came as Türkiye heads for parliamentary and presidential elections that are expected to be held on May 14.
The government has already ramped up spending, including dropping a retirement age requirement for millions and substantial hikes to minimum wage and pensions, 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 minimum wage has been increased by 55% for 2023 and Erdoğan said it may be hiked again throughout the year if necessary.
Erdoğan also announced a measure that would allow more than 2 million people to retire early, a system that could cost around TL 150 billion this year.
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 it 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.