(Bloomberg) -- Turkey’s government will likely extend a tax incentive offered on lira deposit accounts to support the currency, according to people with direct knowledge of the matter.

The Treasury and Finance Ministry last year reduced the so-called withholding tax to encourage savings in the local currency. But consumer inflation has gradually climbed above Turkey’s benchmark interest rate, pushing depositor returns below zero once adjusted for price increases.

Turkey Cuts Tax on Individual FX Purchases, Lira Deposits (1)

The proposal, currently being considered by the finance ministry, would extend the tax advantages until the end of 2021, the people said, asking not to be identified discussing policy plans. 

The ministry said no decision had yet been made on whether the tax breaks would remain until the end of the year.

©2021 Bloomberg L.P.