Business debt burden ‘up 45%’
BUSINESSES have taken on increasing amounts of debt since the start of the Covid-19 pandemic, Cyprus Turkish Chamber of Shopkeepers and Artisans (KTEZO) general coordinator Hürrem Tulga has said.
Many shops and small businesses were offered special loans to help tide them over during the lockdowns but are now struggling to make repayments, according to Mr Tulga.
The fall in the value of the Turkish lira against major foreign currencies and recent hikes in the prices of commodities such as petrol, diesel and gas have also led to consumers cutting back on spending.
Mr Tulga noted that there are currently 10,768 businesses registered to KTEZO, including 4,254 in the Lefkoşa region, 2,476 in Girne, 2,324 in Gazimağusa, 902 in İskele and 812 in Güzelyurt and Lefke. The total number before the pandemic was 12,670, he said.
“A total of 1,902 businesses closed during the pandemic due to economic hardship – 910 in Lefkoşa, 498 in Girne, 404 in Gazimağusa, 31 in İskele and 59 in Güzelyurt and Lefke,” Mr Tulga said.
“Rent debts and bank loan repayment instalments could not be paid and accumulated due to the fight against the pandemic for almost two years. . . Businesses’ bank debts increased by 45 per cent in a year.”
Mr Tulga said that, according to KTEZO records, business closures were more frequent in areas reliant on custom from university students, at the border gates and in districts dependent on tourism. He added that most of the closures occurred in the food and beverage sector.
Mr Tulga said that “no new workplaces were opened during the pandemic” and attributed this to “people’s fear of uncertainty”.
“Rents have increased considerably, the . . . Turkish lira has depreciated, the debt burden has risen and that is why shopkeepers are in a bad situation,” he stressed.
“Even though the wheels of the economy have become a little more active with the arrival of students and tourists, the depreciation of the Turkish lira and the price hikes have negatively affected the economy.”
Mr Tulga said that shopkeepers are being “crushed under the debt burden, especially
by increasing bank loan repayment instalments and rents” while consumers’ purchasing power has decreased.
“Spending has lessened due to economic conditions and people’s priorities have changed,” he noted.
“These topics should be among the issues that the [new] government should find solutions to immediately.”