The government of President Recep Tayyip Erdogan has waived nearly 30 billion lira, equal to 1.61 billion US dollars, in debts, fines and fees under a new law passed on Thursday.

“With the amendment made in … the law, the difference due to inflation accounting in student loan repayments has disappeared. Now only the loan amount used will be repaid,” Mehmet Kasapoglu, Minister for Youth and Sport, said.

The government has written off student loans’ interest rates and late fees worth 27 billion Turkish lira or 1.45 billion US dollars, all pandemic fines issued during the COVID-19 pandemic [2.7 billion Turkish lira or 145 million US dollars] and other debts to the state including utility bills under 2,000 lira (107 US dollars).

Student loans have been a major problem for years as the country’s economic crisis deepens.

More than 5.5 million citizens were not able to repay their student loans used to complete their university education. Now they will only pay off the exact loan without any interest rates.

Also, if debtors repay their debts by June 2023, their names will be removed from the financial black list of people who did not repay their credit card debts or used dud cheques.

Medical intern students who work at hospitals in their senior years will also receive a minimum wage and be exempted from tax.

The law comes in times of economic hardship and ahead of critical parliamentary and presidential elections in which President Erdogan faces the greatest challenge to his 20 years long rule. While the exact date of the election is yet not known, it is expected to take place by the end of June 2023.

Skyrocketing inflation and the lira’s decline in value have made most people poorer and left many unable to pay their debts.

According to official figures, Turkey’s annual inflation rate in October was 85.5 per cent and the lira lost more than 40 per cent of its value only in 2022, Balkan Insight reports.