According to a Twitter handle that publishes reliable data on the Turkish economy, the central bank’s reserve adequacy was 72.6% in April as per IMF criteria, with gross reserves amounting to only $86.3 billion and liabilities standing at $119 billion under the said formula. It factors in 30% of short-term external liabilities in the nearest 12 months and 15% of other liabilities as well as 5% of export and services revenues and 5% of broad money supply. The IMF uses a more complicated formula to calculate the reserve adequacy of central banks. The country’s current account deficit reached $12 billion in the first four months of the year and is likely to hit $30 billion by the year-end. The argument standing out in Turkey is that the country’s central bank has grown more fragile in meeting its liabilities, with more than 60% of its reserves relying on currency swap deals, that is, a “peg leg.”Īccording to central bank data, Turkey has $164.6 billion in debts that will mature within a year. The IMF’s reserve adequacy norm is a matter of debate on both the reserves and liabilities legs. In terms of the ratio of external financing requirements, including the current account balance and debts maturing within a year, to gross domestic product, Turkey is again among the most fragile countries, along with Poland and Malaysia. The ratio of foreign currency reserves to short-term liabilities, supposed to be at least 100%, stands at about 80% for Turkey, which is shown in the most fragile group, along with South Africa, Chile and Egypt. The document - an update to the IMF global financial stability report - reveals that the reserves of Turkey’s central bank are below the adequacy limit. As a result, the adequacy of foreign currency reserves in meeting short-term liabilities has become a closely watched indicator.Ī report released by the International Monetary Fund (IMF) last week, offers data comparing central bank reserves to the short-term liabilities of countries. The turmoil has forced countries to review how they manage the gaps between their assets and liabilities and enact fresh measures.

The US dollar stockpiles of countries have taken on a new importance amid the global economic turmoil caused by the COVID-19 pandemic.

Exceeded limit of 400 fx assets