Surely, you must read all reports and articles about the progress of COVID-19. You see the total number of cases across countries, the economic impact of the pandemic etc. None of this information obviously is a morale booster. We may need to revise all forecasts and predictions if things go south.
This nightmare caught Turkish Business World off guard. Companies that have been trying to survive without making almost any profit may start going bankrupt one after another. But, this may be stopped. Let me tell you a little bit about this harsh reality we are facing right now, before I reveal the remedy:
The other day one of Turkey’s leading companies sent a notice to the bank, stating, “I will not be able to pay off my outstanding checks due to force majeure conditions”, and suddenly all hell broke loose. Those who took checks from the drawer and gave them to a financial institution are now facing risks too. If those checks bounce, collection measures might be taken against those who endorsed them. However, the fact that debt collection requests are suspended by a Presidential Decree until April 30 makes is impossible to recover debts by taking enforcement action against debtors. If this period is extended multiple times, things may get worse than ever.
“Is it the right time for Istanbul Canal Project?”
In my previous articles, I’ve told you about an almost self-activating economic system made by check payment methods and free from strict monitoring. I also remember that I had said a check could change owners approximately 8 to 12 times depending on the season, wondering who will be left out in the cold in the end as long as those checks are being replaced by other checks to extend their maturity when their due dates approach.
The government need to take some serious measures to stop this nonsense. Perhaps, the government should act as a guarantor for these types of commercial transactions and enforce the procedures of the Savings Deposit Insurance Fund (TMSF/SDIF) of Turkey in return for acting as a guarantor so as to ensure that banks be more flexible towards the drawers or the payees. In other words, I expect the administration to impose a set of rules governing partial or fully nationalization of companies that failed to meet their liabilities when the time comes. Otherwise, the system which may be formulated as follows would fall apart:
Production = Revenue
Revenue = Consumption + Investment
At this stage, I expect government to intervene without paying attention to what others say. I advise you to read Professor Eğilmez’s articles in this matter where he insists that government should start printing cash. I must say that he’s absolutely right.
In the end of this process, some of these companies may be transferred to the government, fully or partially. But it’s a risk we have to take. Otherwise, we may have to forget about the anticipated 2.5% GDP growth.
As we are all worried about the negative impacts of the pandemic on Turkish economy, the government, which is quite probably living in a dream world on in an alternate universe, holds the first tender related to Istanbul Canal Project! Shocked by the news, Professor Eğilmez said, “I changed my mind. It’s not the right time to print money!” But, I haven’t changed my mind yet because I believe that Istanbul Canal Project is a message showing that Turkey is still standing tall. Just like the Nabucco Pipeline Project created by Americans with the purpose of annoying the Russians.