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(Kitco News) - Turkey's government is looking to ease some restrictions on its gold market as it plans to lift its ban on some gold imports and implement new fees and a quota system, according to media reports.
Tuesday, the government announced a 20% additional charge for some gold imports. Under the new rules, the government said that any gold imports originating from countries without a free trade agreement and that are not in the European Union will be charged an additional fee on top of existing import and other duties.
The new fee comes a day after state media reported that the government is also looking at implementing quotas for its gold imports.
Monday, quoting an unnamed government official, the Anadolu Agency reported the Treasury had decided to introduce the quota to both relieve the deficit and boost forex reserves. The move comes six months after the government implemented a ban on some gold imports in an effort to reduce its ballooning current account deficit.
Turkey's current account deficit hit $37.7 billion in the first five months of the year, the largest ever in the January-May period, according to government data released last month.
Imports of unprocessed gold in the first seven months of the year increased by 180% from the same period a year earlier to $19.4 billion, Trade Ministry data shows.
Quoting the Treasury and the Trade Ministry official, Anadolu said the quotas will apply to unprocessed gold imports carried out by precious metals brokers who are members of Borsa Istanbul.
The monthly quotas will take into account the amount of unprocessed gold imports carried out by brokers in previous years, the report said. At the same time, imports made for the purpose of subsequent export will be excluded from the quota application in order to encourage gold production and exports.
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The move comes as the nation tries to find a balance within the gold market to meet unprecedented consumer demand while maintaining its gold reserves.
Because of the gold import restrictions, the central bank was forced to sell more than 100 tonnes of its gold from March to May to meet domestic demand. The central bank has only started to rebuild its reserves after it purchased 11 tonnes of gold last month.
In a report published last week, the World Gold Council noted that Turkey's jewelry and bar and coin demand during the first half of the year totaled 118 tonnes, the highest first half-year since 2007.
"Local dynamics in Turkey have proven exceptionally positive for gold demand in recent quarters," the analysts at the WGC said. “Runaway inflation, loose monetary policy, the weakest lira on record and a hotly contested presidential election proved a potent combination, even in the face of a dizzying rise in the local gold price to record highs.”
