Countless Turkish day workers risk falling through a financial safety net being set up to support those idled due to the coronavirus outbreak, as authorities in Ankara scramble for funds to stretch it more widely, Reuters reported.
COVID-19 cases in Turkey have soared to beyond 60,000 with almost 1,300 deaths, triggering curbs that have forced businesses to furlough or lay off millions of contracted staff. The government has promised to top up their income or pay them small daily stipends.
However, cash-in-hand day workers like house cleaners, barbers, small retailers and bus drivers — who the main opposition party says number up to 2 million — are mostly uncovered by those measures.
Officials say more support is in the works, but the state is also running out of ready cash.
It has a hefty $170 billion of foreign debt falling due this year, and the funding backstop of net central bank hard currency reserves has fallen to an 11-month low of $27 billion.
“The risk of an acute balance-of-payments crisis has been magnified by the coronavirus outbreak, as illustrated by an acceleration in capital outflows and dwindling foreign exchange reserves,” said Moody’s of Turkey’s public accounts.
If funding is not found and the outbreak lingers deep into the year, Turkey could — in the rating agency’s worst-case scenario — fail to service some debts and fall into a repeat of its 2018 currency crisis.
Moody’s, and many financial analysts, are also reckoning with possible capital controls as a last-ditch option to tap some of the nearly $200 billion in foreign currency deposits held by locals.
President Recep Tayyip Erdoğan’s government, which has drafted a bill to temporarily ban layoffs, says 2 million Turks have applied for topped-up pay, and some 4.4 million low-income families will receive cash.
That figure will cover those day workers employed by businesses under the support program, but most — who are being advised rather than forced to stay at home under current restrictions — do not fall into that category.