Turkish Cypriots to touch base with Ankara

Turkish Cypriot officials are reportedly getting ready for a trip to Ankara where they will discuss the Turkish economic crisis and its impact on the northern part of the island.

Turkish Cypriot administration officials arranged to meet with the Turkish government, following a phone conversation last week between Turkish President Recep Tayyip Erdogan and Tufan Erhuman who oversees financial matters in the north.

This took place around the same time the north was announcing a number of measures taken to address problems in the private sector and overall economy, which depends on a strong Turkish economy for its lifeline.

Recent announcements included measures to soften the impact of a weak Turkish lira, such as stabilising foreign exchange rates which are vital to rental property revenue.

But according to Kathimerini Cyprus, recent labour action by air traffic controllers, which was called off Wednesday morning, was raising concern within the administration amid warnings that workers would not accept cuts on overtime pay.

Air traffic controllers said they would postpone strike measures as long as officials did not take their overtime pay away.

But it is not clear what common steps will be taken by Turkey and Turkish Cypriots to avoid a deepening of the crisis.

According to Hurriyet daily, Turkey's Treasury and Finance Minister Berat Albayrak said he did not foresee a long-term risk to the economy or financial system, despite the lira having lost about 40 percent of its value this year.

Economists and political analysts say the crisis in Turkey is not unrelated to Turkish-US tension, primarily the home arrest of a US pastor accused of having links to terrorism, which also spilled into other domains including the economic and financial sectors.

But ratings agencies are beginning to show concern, with Moody’s downgrading some 20 financial institutions on Tuesday.

Turkish companies are expected to take a hit since they have been borrowing in euros and dollars in the past, taking advantage of lower rates.

It is not clear how banks will respond to the crisis or how long it will take to bounce back.