Lately, questions have been popping up about the quota on unprocessed gold imports. So, we thought we’d better clarify the situation before things get out of hand.
Why do we need a quota in the first place?
According to data from the Turkish Statistical Institute, unprocessed gold imports in 2022 skyrocketed, rising by over 200% compared to the previous year, reaching a whopping 379.2 tons (worth $20.4 billion). In just the first seven months of 2023, we were already at 320 tons (worth $19.2 billion).
Meanwhile, the Central Bank’s balance of payments data revealed that in 2022, of the $49.1 billion current account deficit, a cool $19.4 billion (39% of the total) came from net gold imports. As if that wasn't enough, in the first seven months of 2023, the current account deficit was $42.3 billion, with net gold imports contributing $17.7 billion, or 42%, of that.
Long story short: we’re importing gold like there’s no tomorrow, and it’s hurting the balance sheet. So, we figured it’s time to put a cap on it.
How was the quota set?
We did some math (don’t worry, we double-checked) and decided on a quick and effective solution: quotas! Starting from August 7, 2023, the monthly import quota was set at 12 tons—roughly 1.5 times the long-term monthly average of 8 tons. Because, hey, we love round numbers.
Who does the quota apply to?
Under foreign exchange regulations, only precious metals intermediary institutions authorized by our Ministry can import unprocessed gold. So, this quota applies to them. If you're not one of those cool companies, you can only import unprocessed gold under the Inward Processing Regime (IPR), which, lucky for you, isn't affected by this quota.
How is the quota distributed?
We based the quota distribution on how much unprocessed gold each intermediary company imported between January 2022 and July 2023. The process was totally fair and rule-based. Plus, we set aside a small reserve for companies that didn’t import gold during this period but want to get in on the action now.
Any changes to the process?
After hearing from some jewelry exporters about limited access to raw materials and sky-high price margins, we’ve made a few tweaks. A portion of the quota is now reserved exclusively for jewelry exporters, allowing them to buy gold through banks. They can now present proof of their exports and buy unprocessed gold accordingly. We aim to keep the bling business running smoothly!
We also reduced the share allocated to intermediary institutions and increased the portion reserved for jewelry exporters and certified gold businesses. Public banks are also now in the mix, selling unprocessed gold to meet the industry's needs.
As of now, the monthly 12-ton quota is distributed as follows:
- 25% for jewelry exporters,
- 38% for certified gold businesses,
- 33% for intermediary institutions that imported gold in 2022 and 2023,
- 4% for those who didn’t import during that period but are keen to start now.
Has the quota been effective?
Oh yes! According to Turkish Statistical Institute data, from August 2023 to the end of the year, unprocessed gold imports fell by $3.2 billion, reaching $10.3 billion—a 32.7% decrease in quantity to 169.6 tons. In the first two months of 2024, unprocessed gold imports were down by $6.8 billion year-on-year, amounting to just $2.1 billion. The volume? Down 77.9% to 33.1 tons.
As of February 2024, the 12-month cumulative current account deficit stood at $31.8 billion. We expect the balance to keep improving, with gold imports playing their part in this positive trend.
What’s next for the quota?
We’re keeping a close eye on the situation to ensure that the needs of intermediary institutions, jewelry exporters, and certified gold businesses are met. Our goal is to keep prices reasonable and ensure everyone has access to the gold they need. Thanks to these adjustments, access to raw materials has improved, and price margins have come down.
We’ll continue to prioritize the raw material needs of the industry and improve access to unprocessed gold for exporters. Rest assured, we’re on it, and we’ll take any necessary steps to keep things moving smoothly.
Respectfully shared with the public!