Rs 26654420000000 worth gold hidden inside houses, Turkey government unable to retrieve it because...
Turkey is currently dealing with tremendous pressure due to several reasons, but one of the primary concerns is the rapid increase in the country's current account deficit. The Middle Eastern country's current account deficit reached USD 20.3 billion between January and April this year. It is believed that a significant portion of gold is kept in households, remaining outside the banking system and untraceable by the government. Why Is Gold Kept In Homes?
In Turkey, it's a decades-old tradition in which people prefer to keep gold and jewellery at home. This practice is known as under-the-pillow savings. When the government feels economic uncertainty, the government appeals to people for their help. The countrymen then use their personal gold. But normally, this gold remains out of the reach of banks and untraceable for the government. Rs 2665442 Crore Worth Gold Not Deposited In Banks
According to an estimate by Turkey's central bank, there is about USD311 (approx 265442 crore) worth of physical gold kept in houses, and not deposited in the banks. Notably, this amount is many times more than the gold reserve of the central bank, which is currently, nearly USD 86.5 billion. Why Is Investing In Gold So Popular In Turkey?
Similar to India, in Turkey, people also like to invest in gold and consider it a safe investment. During weddings, people also likes to give and take gold in the form of jewellery. In 2023, the Middle East country ranked fourth in the world in the consumption of gold jewellery, followed by China, India and the US.
Turkey's economic downturn, marked by a sharply depreciating lira and soaring inflation (reaching 85 percent in 2022), has altered consumer gold purchasing habits. Investment-oriented gold coins and bars have replaced jewellery as the preferred form of gold acquisition. Distance From Banks And Fear Of Tax
Another major reason is tax avoidance by the people. In Turkey, bank deposits are taxed, and details regarding the large transactions reach the government. On the other hand, gold kept in houses by the people is tax-free.
Notably, when the government implemented a tax of 0.2 percent on gold purchases through banks in the month of March, the majority of the population started ignoring the formal system, buying gold in cash.
Witnessing this, the Turkish government has made it mandatory to show an identity card for purchasing jewellery worth more than USD5,274. The sale of gold bars without a certificate has also been banned by the government to curb the practice.
In 2016, President Erdogan requested people to deposit money and gold in banks so that the country's currency could be strengthened. The government even started the 'Gold Conversion System' under which people can deposit their gold in the bank through government-authorised jewellers. This scheme started in 2022.
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