## Turkey: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Turkey

_IMF Staff Country Reports, June 11, 2021_

## Source details

**Canonical URL:** [Turkey: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Turkey](https://www.imf.org/en/publications/cr/issues/2021/06/11/turkey-2021-article-iv-consultation-press-release-staff-report-and-statement-by-the-50205)

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## Bibliographic details
- Published: June 11, 2021
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513573175.002

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### Pandemic impact and macroeconomic outcome
- The human and economic toll of the COVID-19 pandemic in Turkey has been severe: "Thousands of lives have been tragically lost and many livelihoods compromised."
- Despite the pandemic, Turkey experienced positive economic growth in 2020 due to rapid monetary and credit expansion and large liquidity support.
- Rapid policy response and a sharp growth rebound set Turkey apart from many peers.

### Emergent vulnerabilities and transmission channels
- Policy measures that supported growth also aggravated pre-existing economic and financial vulnerabilities:
  - Higher inflation.
  - Increased dollarization.
  - A large shift in the current account position that increased pressure on the lira.
  - Heavy foreign exchange sales that led to steep reserve declines from already-low levels.

### Policy developments and shifts
- A policy shift in late 2020 emphasized:
  - Tighter and more transparent monetary policy.
  - Slower credit growth.
- The late-2020 policy shift was characterized as both welcome and necessary.
- The durability and depth of the policy shift were questioned in March 2021 after a change in central bank leadership:
  - The lira weakened markedly.
  - Interest rate spreads widened.

### Subjects and keywords (as listed)
- Subjects: COVID-19, Financial institutions, Foreign exchange, Health, Inflation, International organization, Monetary policy, National accounts, Prices, State-owned banks
- Keywords: COVID-19, credit policy, Europe, fiscal policy coordination, FX rediscount credit repayment, Global, IFC portfolio implementation, IMF staff calculation, Inflation, policy uncertainty, State-owned banks

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_Source: https://www.imf.org/en/publications/cr/issues/2021/06/11/turkey-2021-article-iv-consultation-press-release-staff-report-and-statement-by-the-50205_