CHP questions ‘record unknown capital inflow’

ISTANBUL - Reuters

CHP report says gold trade and unidentified capital narrowed current account gap. REUTERS Photo

Turkey’s main opposition party has questioned in Turkey’s record amount of capital of unexplained origin that entered the country over the past year in a fresh economy report, which also drew attention to changing gold balance.

“The amount of capital inflow of unknown sources in Turkey has reached $12.7 billion over the past 12 months. And this is the record highest for whole Republican history,” the 92nd Economic Outlook Report prepared by the Republican People’s Party (CHP) read.

The report was prepared by taking the March 2014 balance of payment figures and says “the record in capital inflow with unknown sources is meaningful, as capital inflow from official fund accounts were halted during the period.”

The report says $58 of every $100 current account gap has been funded by capital inflow of unknown origin, which is recorded as “net error omission” in the account.Central Bank data announced on May 13 showed Turkey’s current account deficit had contracted by 30.8 percent to $11.5 billion in the first three months.

The report further claims the rest of the deficit was financed by the Central Bank’s reserve auctions.

Gold trade

The CHP report also suggests that most of the contraction in the deficit was led by Turkey’s gold trade, which has been reversed due to unknown reasons. “Around $3 billion of the $5.1-billion recovery from last year’s same period was undertaken by the gold trade. Therefore, $58 of every $100 recovery is sourced by gold trade,” the report states.

The report recalls that the gold-for-gas trade with Iran made Turkey’s gold exports peak in 2012 and after falling since the first months of 2013, it began rising again as of February 2014.

However, the CHP report argues the exports’ destination has switched to Switzerland from Iran “due to unknown reasons.”

Ankara was paying for its natural gas and oil imports with the Turkish Lira, and Iranians were using those deposits held in Turkish bank accounts to buy gold.  However, the trade tailed off last year when U.S. sanctions on Tehran tightened, leading to the remarkable closure of the deficit in Turkey’s trade balance.

CHP also reminds Turkey registered a record amount of gold exports to Switzerland in the first quarter as a whole amounted to $2 billion, up from just $102,912 a year earlier.