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Erdogan delights Turkish depositors with lira let-up in possible election gambit

Tayyip Erdogan's plan to defend lira deposits has given Turkish savers some respite as well as possibly laying the ground for an early election by the President, but it risks piling up debt and stoking already rife inflation.

Erdogan, Turkey's leader of nearly two decades, has been pushing ahead with a “new economic model” he says will boost jobs, growth, exports and deliver cheap credit but has been hit in the ratings by a damaging drop in the lira.

Central to Erdogan's promise on Monday was an effective tax-free guarantee, backed by the Treasury, that Turks would be made good on the difference between what they earn on their deposits through interest rates and any adverse exchange rate move, encouraging savers to sell dollars and buy lira.

For some, his latest policy move, with short-term gains and potential longer-term pain, is a signal that Erdogan may intend to hold an election within months, well ahead of presidential and parliamentary elections which are scheduled for mid-2023.

“I expect a snap election. What has been done in the economy so far is an election strategy,” said Ozer Sencar, president of Turkish polling group MetroPoll.

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Analysts have interpreted recent moves as a last-ditch attempt by the president and his AK Party to shore up their socially conservative, working and lower middle class voter base, and to return to his past record of economic growth.

But Erdogan's government could be left on the hook to cover future losses based on the exchange rate, analysts and bankers said after the lira's rapid rally on Tuesday, which they said could yet fizzle out and reverse.

The latest pledge amounts to a turnaround for the 67-year-old, who has staked his new economic program on slashing rates and rejecting the concept of interest. But Turkey's public finances are strong compared to other emerging market countries, leaving it room to provide support.

Erdogan made his announcement just hours after the lira breached 18 to the dollar for the first time ever on Monday, with a series of steps he said would reverse a tidal wave of depositors shifting lira deposits into dollars.

Official data shows term lira deposits held by ordinary Turks were about 1.2 trillion lira ($92.5 billion) on Dec. 10.

Were the new measures to cover it all and if the exchange rate rises 20 percent faster than Turkey's central bank deposit rate, this would amount to a 240 billion lira hit to Ankara's budget, Hursit Gunes, an economist at Marmara University, estimated.

While questions such as how and when the Treasury will pay and how to account for the tax relief remain, for depositors the new policy delivered much needed protection from erosion.

Bankers told Reuters they had therefore converted up to $1.5 billion in savings on Monday night alone, driving the lira's biggest rally on record in volatile trading. [USN LINK]

“If you expect the exchange rate to double, which happened (in the last two months), then the return on lira deposits is 100 percent for you,” Refet Gurkaynak, head of Bilkent University's economics department in Ankara, said.

“But it can have dangerous consequences,” he added.

Turkish banks already pay 16-18 percent rates on deposits and are unlikely to offer much more given the policy interest rate is 14 percent after an aggressive and unorthodox monetary easing cycle.

Under pressure from Erdogan, Turkey's central bank has cut rates by 500 basis points since September, setting off the worst lira crisis in two decades on fears of an inflationary spiral.

‘No free lunch’

Annual inflation breached 21 percent last month and is expected to soar beyond 30 percent next year due largely to the currency crash, which stokes import prices. Food and other basic goods are higher still, rattling already stretched households.

Any further currency depreciation could theoretically mean limitless new debt being issued by the Treasury. The government could then turn to the central bank to monetize this, creating another inflationary wave, bankers and analysts said.

“There is no free lunch for the lira. The cost of the support measures will come through to corporates ultimately in the form of higher borrowing costs or higher taxes,” Dubai-based Hasnain Malik, head of equity research at Tellimer, said.

“There is no escape from re-establishing a credible interest rate policy environment,” he added.

While a government source with knowledge of the matter acknowledged the budget burden and inflation could rise, they said “these can be managed”, adding: “All of the decisions announced include protections against risks”.

Cemil Ertem, a presidential adviser and member of the government's Economic Policies Committee, told Reuters the deposit guarantee was a “historic change” that removes individuals' need for dollars to protect against inflation.

But a senior banker said the new policy will only work well if the economy maintains a current account surplus, and the government still needs to explain some details despite a rough outline from the Treasury on Tuesday.

Turkey's budget deficit is projected to be about 3.5 percent of GDP for this year, up from 1.5 percent earlier in the year.

“How and when is the Treasury going to pay the difference. Is it going to pay once every three months or once every six months?” said the banker, requesting anonymity.

Read more:

Turkey’s lira mounts big comeback after Erdogan unveils anti-dollarization measures

Lira plunges again after Turkey’s Erdogan rules out higher rates

Turkish government to present extra budget as lira dives

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Almarai signs an MoU with the Authority of People with Disabilities to train and employ them.

Almarai Company signed a memorandum of understanding with the Authority of People with
Disabilities to train, qualify and employ persons with disabilities. This came on the sidelines of
the First International Labor Market Conference, organized by the Ministry of Human Resources
and Social Development on December 13 – 14, 2023, at the King Abdulaziz Convention Center
in Riyadh.

The memorandum was signed by the Chief Human Resources Officer of Almarai Company,
Fahad Mohammed Aldrees, and the CEO of the Authority of People with Disabilities, Dr.
Hisham bin Muhammad Al-Haidari.

“This agreement comes within the framework of the company’s social responsibility program, as
Almarai employs more than 500 people with disabilities, which is one of the most suitable work
environments for them.” Fahad Aldrees said. Pointing out that Almarai has the “Silent Line”,
which is one of its production lines that is designated for people with hearing disabilities.

It is worth mentioning that Almarai supports over 300 charity organizations annually across the
kingdom that operate in the field of community development.

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Central Phuket Shopping Center Prepared Surprises This Christmas & New Year 2024

Central Phuket Shopping Center, the luxury lifestyle landmark o Phuket, invites everyone to celebrate Christmas and New Year 2024 in The Great Celebration 2024 Campaign. Joining hands with global partner ‘The Pokémon Company’, Central Phuket bring over Pokémon, the super cute character popular around the world, for all locals and international fans. The special campaign launch presents a procession of cute ‘Pikachu’ alongside with the giant Christmas tree for the first time in Thailand.
This December, Central Phuket prepared many activities for shoppers when visiting Phuket! Experience the “Surprise of the Day” with free Cotton Candy for our little ones, a sweet and fluffy treat, a special gift from Central Phuket. Bring your kids to enjoy this sweet treat every Saturday and Sunday throughout the month of December. Don’t miss the Christmas Carol that
everyone loves, little Santas spread freshness by singing together in the Christmas Carol activity. Plus, Christmas Live Music, the festival of joy is back! Celebrate Christmas in a luxurious and classy atmosphere, enjoying the music that will bring us joy. Also, there will be Christmas Troop, Santa Claus is coming to town! The Santa troop will spread happiness throughout Central Phuket. Lastly, Cake Workshop, workshop activity with Chef Sebastien’s IRON CHEF Thailand teaching how to make Christmas Vanilla Cake. A special activity for the Christmas season. Moreover, Central Phuket provides special promotion exclusively for international tourists throughout December 23 – January 24 including:

1) Get Free! Tourist welcome discount package valued up to THB 10,000.
2) Receive THB 100 Gift voucher when spending up to THB 2,500 per receipt.
3) Get to buy ‘Happy Holiday Collections’ special price: Pokémon 2-in-1 pillow blanket, tumbler, travel bag set, and keychain. Visit redemption counter for the price.
4) Exclusive for Grab Users get discount code up to 25% off* when traveling to participating Central Shopping Centers.
5) Receive famous Elephant Pants when spending over THB 5,000 in shopping center.
6) Get Free! H&M THB 100 gift voucher when booking any accommodations in Phuket with Agoda. Terms and conditions apply.

Central Phuket is a home of global luxury brands such as Alexander McQueen, Balenciaga, Ermenegildo Zegna, Gucci, Hermès, Louis Vuitton, and Saint Laurent. Exclusive for this season, Louis Vuitton launches a pop-up store located at Central Phuket. The design is inspired by the story of Damier or Checkerboard, the brand’s signature pattern. This classic pattern was created by Louis
Vuitton and his son Georges Vuitton in 1888 and has always been part of the design of Maison’s iconic items and concepts. Find clothes, shoes, bags, and accessories for men at the Pop-up Store from Louis Vuitton at Central Phuket, 1st floor, from today until 31 March 2024. And with over 500 renowned fashion brands and lifestyle shops ranging from local to international
well-known brands covering all categories, international shoppers will be able to find what they are looking for in Central Phuket.
Central Phuket is located in the heart of one of the world’s most famous beach cities, Phuket and await to welcome both locals and international visitors this holiday. Also, don’t miss one of the most joyful New Year Count Down events in Phuket city at Central Phuket Shopping Center on December 31, 2023.

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Saudi Fund for Development Provides $100 Million Development Loan for the Rogun Hydropower Project

The Saudi Fund for Development (SFD) Chief Executive Officer, H.E. Sultan Al-Marshad, signed a new development loan agreement with the Minister of Finance of the Republic of Tajikistan, H.E. Kahhorzoda Fayziddin Sattor, through which SFD is contributing $100 million USD to fund the Rogun Hydropower Project, a landmark initiative that will enhance energy,
food, and water security, and foster sustainable development in the country. The signing was attended by the Ambassador of the Kingdom of Saudi Arabia to the Republic of Tajikistan, H.E. Waleed Al-Reshiadan, and the Ambassador of Tajikistan to Saudi Arabia, H.E. Akram Karimi, alongside other officials from both sides. SFD’s development loan will help contribute towards a more sustainable and equitable food and water future for Tajikistan, while driving the country’s energy transition and climate resilience. The project aims to contribute to the national energy security and will help advance sustainable
development in the Republic of Tajikistan, by providing the renewable electricity supply to meet local demand and expand electricity production domestically and regionally, producing 3600 MW of energy. The loan agreement will also finance the construction of a 335-meter-tall dam, which will enhance irrigation capabilities and bolster agricultural activities across the country. Additionally, the project will improve flood protection through the construction of four hydraulic
tunnels for diversion and drainage. It will also provide clean and drinkable water to people through desalination, and help advance socio-economic development, by creating both direct and indirect jobs.
Importantly, this project also supports the realization of the UN Sustainable Development Goals (SDGs); specifically, SDG 2, Zero Hunger, SDG 6, Clean Water and Sanitation, and SDG 7, Affordable and Clean Energy.
On this occasion, the CEO of SFD, H.E. Sultan Al-Marshad, said: “Today’s signing marks a major milestone in our shared journey towards a more sustainable future. With this landmark development loan, SFD is not just supporting Tajikistan’s energy future, but also its sustainable development and the well-being of its people. The Rogun Hydropower Project is a beacon of
hope for a bright future that is powered by clean, renewable energy. It will propel Tajikistan towards environmental stewardship and prosperity.”

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