Currency changes heralded in Turkey
Turkey will mark the start of 2005 by ceasing to be the land of the millionaires and billionaires.
That is when the government drops six zeros from the national currency and Turkey loses the dubious distinction of being the country with the largest denomination in circulation, the 20,000,000 lira, worth only about €10.80.
The zeros are the result of decades of double-digit inflation and introducing a new currency has been a Turkish goal for years, but the government only moved forward in 2004, the first time in three decades in which inflation fell into single digits.
For many Turks, the new money will simply end the confusion of dealing in a currency in which the smallest coin in general circulation is the 50,000 and a short taxi ride can set you back 5 or 10 million.
Bigger purchases can be measured in the billions and the Turkish gross national product is a mind-bending 424 quadrillion or 424,000,000,000,000,000.
Officials hope that the new money, called the new Turkish lira, will make it easier for international trade, which often involves trillions of old lira, and will boost confidence in the economy as Turkey pushes for EU membership.
“The Turkish lira has been like funny money … and now at least in cosmetic terms it will look like a real currency,” said Tevfik Aksoy, chief economist in Turkey for Deutsche Bank.
But behind the change has been stunning economic progress that helped push EU leaders in December to agree to open accession talks with the overwhelmingly Muslim country.
In 2001, Turkey was mired in its worst economic crisis in decades. The lira plunged, inflation hit 70% and two million people lost their jobs.
In national elections the next year, Turkish voters kicked out the weak coalition government and gave Recep Tayyip Erdogan’s Justice and Development Party a strong enough mandate to rule alone.
Political leaders during the crisis agreed to an €11.3bn International Monetary Fund-backed austerity plan and the new government stuck to the measures, which have included a privatisation programme, budget cuts and new autonomy for the Central Bank.
Exports are way up, increasing 30% in the year ending this September, powered by textiles, home appliances and cars – Toyota, Hyundai, Fiat and Ford all have plants in Turkey.
Turkey’s success in gaining a date from the EU for accession talks has led to hopes of more foreign investment.
The economy is expected to have expanded by 7.9% in 2004 and 5% growth is projected for 2005, Aksoy said. Inflation in September was 9% and is projected to be 8% next year, according to the Central Bank.
But not all Turks are happy.
Unemployment is still high, estimated at some 10%, and some Turks say they will be depressed when they wake up on New Year’s Day and see that the millions or maybe even billions they had in the bank are just hundreds or thousands of new lira.
