Turkey’s central bank has posted a staggering loss of 700.4 billion Turkish lira ($18.4 billion) for 2024, according to the latest balance sheet published in the Official Gazette. This marks a troubling continuation of financial strain, following a similar shortfall of 818.2 billion lira ($25 billion) in 2023. This deepening crisis underscores the mounting pressure on the country’s financial system, already strained by the ongoing economic turbulence, as reported by Dünya.

The losses come as a sharp contrast to the bank’s previous profits—57.5 billion lira in 2021 and 72 billion lira in 2022—highlighting the extent of the current crisis. These back-to-back deficits are largely attributed to the central bank’s controversial foreign exchange-protected deposit scheme. Launched in late 2021 to curb the plummeting value of the Turkish lira, the program aimed to stabilize the currency by compensating depositors for any losses caused by currency fluctuations. The scheme, which ended earlier this year, has placed an enormous strain on the central bank’s reserves.

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As a result, the central bank has been unable to transfer any profits to the Treasury for the second consecutive year—a worrying sign for the country’s fiscal health.

In addition to the losses, the central bank’s fiscal report for 2024 shows a notable rise in its total assets, which increased from 6.92 trillion lira in 2023 to 8.59 trillion lira by the close of 2024. This growth, however, offers little reassurance in the face of the mounting financial difficulties.

Turkey’s economic outlook remains grim as inflation continues to ravage the economy. The country has battled double-digit inflation since 2019, with everyday living costs rising steadily. While the official inflation rate fell to 38.1% in March, marking its 10th consecutive month of decline, independent economists from the Inflation Research Group (ENAG) paint a much bleaker picture, estimating a 75.2% rise in consumer prices for the same period.

Compounding the country’s economic woes, a political crisis ignited by the arrest of İstanbul Mayor Ekrem İmamoğlu has further unsettled markets. The charges against İmamoğlu, widely seen as politically motivated, have only deepened uncertainty surrounding Turkey’s economic and financial future.

In response to the turbulence, the central bank has taken the drastic step of selling off foreign exchange reserves in an attempt to stabilize the lira’s exchange rate. Media reports suggest that the central bank’s losses could balloon to over $45 billion, exacerbated by the fallout from İmamoğlu’s arrest and the broader political climate.

With the central bank’s general assembly set to convene on April 30 to discuss these dismal results, the focus remains squarely on how Turkey’s financial authorities will navigate this storm of economic and political challenges.