KKM is over, high interest remains

Currency-Protected Deposits (CCD), introduced to conceal economic errors, have been terminated due to a high-interest policy that has brought record costs. The economic administration announced the closure of CCD in line with its goals. The approximately $11 billion in savings remaining in CCD will be liquidated through payments made by the end of the year.

According to data shared by the Central Bank, approximately $3 billion worth of KKM accounts will be closed in September and November, and approximately $4 billion in October. Thus, KKM, which exceeded 3.4 trillion lira in 2023 and had an incalculable cost, will be consigned to the dusty pages of history by the end of 2025. Only high interest rates could have lured investors accustomed to foreign exchange returns from KKM back into Turkish Lira. The Central Bank's policy rate of 43% represents the highest borrowing cost in the world after Venezuela.

The share of interest has doubled

Rising borrowing costs led to a record 1.246 trillion lira in interest payments from the budget between January and July of this year. Interest, which accounted for 17.4 percent of tax revenue last year, now accounts for 21.8 percent of taxes paid by citizens and companies.

Since the referendum on the presidential system in 2017, the share of interest in the budget has doubled. During this period, the share of interest in tax revenue has risen from 10.5 percent to 21.8 percent, while interest payments have increased from 56 billion lira to 1.2 trillion lira. Economist Uğur Gürses, who wrote an article about the termination of the KKM, emphasized, "Both the KKM and high interest rates are the result of flawed policies."

'At KKM, all blame cannot be placed on the past'

Economist Ali Çufadar stated, "The KKM program has resulted in a wealth transfer unprecedented in our history." He added, "The cost of the KKM program is partly the result of the past and partly the result of orthodox policies. Not everything can be attributed to the past. Lower costs were possible with reasonable policies." Çufadar cited the real sector and citizens who were able to access loans through the Treasury as the winners of the KKM program, while the losers were retirees, workers, and those who invested their savings in Turkish Lira.