Turkish pharmacists association chairman Erdoğan Çolak has stated that data show 503 types of drugs are being distributed only on a limited basis to the Turkish market due to an ongoing currency crisis, making it difficult for patients to obtain their medications, the Birgün daily reported on Friday.
Limited distribution causes a gap in supply and demand, but sector representatives claim that the real crisis is expected to begin in two weeks’ time, when warehouses run out of certain types of drugs and are unable restock due to the Turkish lira’s dramatic decrease against the euro. As of Friday, 1 euro equaled TL 7,44.
Drug companies have not made any open demand to the government for an increase in the drug currency rate.
There are allegations that the government is pressuring drug companies and has avoided an explicit demand by promising them the fixed drug currency rate will soon be increased.
The Turkish government set the lira’s value for drugs at 2,69 against the euro in February, which prevents drug companies from selling medications at a higher rate to pharmacies regardless of changes in the rate of exchange. The regulation was intended to avoid constant fluctuation in drug prices and make them available to the public.
The regulation also fixes the profit of drug suppliers and pharmacies. However, the regulation has not been updated since February. As the lira continues to lose value against the euro, the gap between the amount drug companies pay to European suppliers and the amount they receive from Turkish pharmacies is widening.
Turkish lira crashes to record low on worries over economy, US row
Turkish Lira (TL) plunged to 6,80 against the US dollar on Friday as worries about President Recep Tayyip Erdoğan’s influence over monetary policy and worsening US relations snowballed into a market panic that also hit shares of European banks, Reuters reported.
The sell-off has deepened concern about exposure to Turkey, particularly whether over-leveraged companies will be able to pay back loans in euros and dollars after years of overseas borrowing to fund a construction boom under Erdoğan.
Erdoğan’s characteristic defiance in the face of the sell-off has further unnerved investors. The president, who says a shadowy “interest rate lobby” and Western credit ratings agencies are attempting to undermine Turkey’s economy, said in a speech overnight that Turks should “have no worries”.
“If they have their dollars, we have our people, our God,” he told a crowd in the Black Sea city of Rize.
He likened the successive loss in value of the lira to a coup attempt on July 15, 2016, saying, “We won’t lose the economic battle,” after Friday prayer in Bayburt province, according to the Cumhuriyet daily.
That is unlikely to mollify investors who are also worried by a growing dispute with the United States. The NATO allies are at odds over the detention in Turkey of American pastor Andrew Brunson on terrorism charges.
Those tensions with Washington have compounded concerns about Turkey’s authoritarian trajectory under Erdoğan.
“The basic reason the exchange rate has gone off the rails is that confidence in the management of the economy has disappeared both domestically and abroad,” said Seyfettin Gürsel, a prominent economist and a professor at Turkey’s Bahçeşehir University.
“First of all, confidence needs to be regained. It is obvious how it will be done: Since the final decision-maker of all policies in the new regime is the president, the responsibility of regaining confidence is on his shoulders.”
The lira was at 6,80 against the dollar at on Friday. Shares of European lenders also dropped, hit by concern about their Turkey exposure. The currency has fallen more than 35 percent this year after losing nearly a quarter of its value in 2017.
“The situation of Turkey cannot go on for much longer — I think they will have to intervene,” Cristian Maggio, head of emerging markets strategy at TD Securities, adding that the intervention needed to be “drastic.”
“Turkey is playing a very dangerous game. They keep lagging behind the curve, and the pace of the depreciation and the penalty that the market inflicts on Turkey when it sells off is increasing at a more than linear pace, almost exponentially.”
Erdoğan says Turkish economy will grow despite ‘attacks’ on currency
Erdoğan, a self-described “enemy of interest rates,” wants cheap credit from banks to fuel growth, but investors fear the economy is overheating and could be set for a hard landing. His comments on interest rates — and his recent appointment of his son-in-law as finance minister — have heightened perceptions that the central bank is not independent.
The central bank raised interest rates to support the lira in an emergency move in May, but it did not tighten at its last meeting.
President Erdoğan said on Friday that yet-to-be-released figures would show the Turkish economy grew in the second quarter “despite all attacks on our country over foreign currencies,” the T24 news website reported.
“They have now started to say currency… Let’s give up on that. Let’s focus on our business, it will be better,” Erdoğan said during a political rally in northern Gümüşhane province.
Global observers have criticized Erdoğan’s ambition to reach high growth numbers, which eventually boosts inflation and causes losses in value of the country’s currency. On Friday the lira hit 6.80 against the US dollar, a historic record.
Albayrak’s ‘new economy approach’ unhelpful to Turkish lira’s free fall
Finance and Treasury Minister Berat Albayrak — Erdoğan’s son-in-law, appointed last month — held a meeting on Friday at Dolmabahçe Palace in İstanbul to announce the policies Turkey would adopt for the new term, called the “New Economy Approach,” promising “decisive and strong steps,” the Habertürk daily reported, but it did little to help the TL free fall.
