With what authority do the Treasury and the Center force the exporter to SWAP? – Competent report

It is a matter of curiosity with what authority the obligation to sell the export foreign currency to the bank at the rate determined by the Central Bank was made. (Photo: Ministry of Transport)

The central bank; In the article of annex 1 of the circular “regulating the questions and principles relating to the return of export prices to the country”, 25% as of January 3, 2022, on the instruction of the Ministry of Treasury and Finance from 31.12.2021; On the instruction of 15.04.2022, it became mandatory to sell 40% of exported foreign currency to the bank, at the rate determined by the bank, from April 18, 2022. Faced with the situation, the business world, whose exports rely on imports, is very angry and confused these days, beyond a distrust of the management of the economy. Questions arise in the context of economics, with what logic and authority this is done.
The business community, which seemed to accept the situation by not opposing it when the obligation to sell 25% of export currencies was first introduced; He is very disturbed by the increase in this rate to 40%. The business community, which eroded the official gates in Ankara to reverse the decision and lashed out at the Treasury and Finance Ministry and other interested parties, is struggling to find a way to stop them from be harmed when selling export currency and at least buy foreign currency for imports.

By what authority?

The administration is said to be able to say yes to a formula that allows exporters to buy back the foreign currencies they had to sell to the Central Bank at the exchange rate used when selling them. If yes, the exporter; He will be able to buy back the foreign currency that he sold at the same exchange rate that he sold it. So it will be something similar to the Currency Protected Deposit.
This is how SWAP deals are made: central banks lend each other a certain amount of TL and foreign currency; then the same amounts are returned.
Essentially, the Central Bank forces exporters to SWAP.
However, it is unclear with what authority the ministry and the Central Bank are doing this.
Neither the Ministry nor the Central Bank has any authority in this regard.
According to Article 8 of Decision No. 32 on the protection of the value of Turkish currency, “the reduction of export costs is free. If necessary, the Ministry is authorized to make arrangements for the return of export awards to the country.
According to article 20 of the said decision n° 32: “The Ministry […] In the presence of justified reasons and force majeure, it is authorized to extend the time limit for contributing foreign currency, to partially or totally remove the obligation to contribute foreign currency, to modify the amounts seen in the decision and to set the amount.
That’s all…

Neither the Treasury nor the Center has such authority.

As the ministry itself is not authorized, it does not have the power to order the Central Bank to impose an obligation to sell part of the export earnings to the bank.
Article 12 of the Ministry’s Communiqué on export royalties No. 2018-32/48 entrusts the Central Bank with the mission “to announce the terms and principles to be determined by the Ministry for the implementation of the said communiqué”. .
This is the power of the Central Bank!
In Decision 32, it was stated that “savings on export costs are free”; The Ministry was empowered to arrange for “only” export prices to be brought into the country; however, he was not allowed to “force to sell”.
This authority has not been given to the Central Bank. The duty and authority conferred on the Central Bank by Article 23 of Decision No. 32 is to regulate the procedures and principles regarding “Documents for the Purchase and Sale of Currency and Transfer Documents for Turkish Currency ” issued by banks, authorized institutions, intermediary institutions.

Looking for answers to these questions

If so, is it possible to answer the following questions regarding the ministry and the CBRT in a legal and satisfactory manner according to the basic legal rules stated above?
• With what authority did the Ministry require such notification to be issued?
• If the Ministry thinks it has the power to make such a decision, why has it not made it itself, announced it in the Official Gazette, and why? did he ask the Central Bank, which is neither authorized nor responsible, to issue it?
• On the basis of what authority did the ministry instruct the Central Bank to issue such a circular?
• Why did the Central Bank accept an instruction that did not comply with Decision No. 32 that the Ministry was not empowered to do?
• Similarly, on what authority did the Central Bank issue such a statement, although it has no obligation or authority?

Unfair and illegal practice

Powers; It is illegal for the Ministry and the Central Bank, which consists in applying and regulating the formalities of Decision No. 32, to oblige exporters to make a kind of SWAP by obliging them to sell 40% of the value of exports to the Central Bank, at the rate determined by the Central Bank.
It is unfair and illegal for the Central Bank to intervene in market transactions by imposing its own price and harming exporters. On the other hand, giving some sort of exchange protection guarantee to exporters when buying foreign currency is also contrary to the Constitution’s principle of equality in terms of the use of taxes for the benefit of a group.
More importantly, the controversial decisions of the Ministry and the Central Bank to comply with Resolution 32 and the following methods lead to a loss of confidence in the markets, a weakening of the economy and a reduction in general well-being.
It will be beneficial not only for the exporters but also for our country and for all of us if this obvious mistake is corrected as soon as possible.

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