Public outrage is growing in Turkey over the cost of a government scheme to curb dollarization and prop up the Turkish lira, launched hastily in December to stop the dizzying slump of the currency, now that payments have begun to depositors who joined the scheme for three months.

Unlike the initial assurances of officials, the scheme has put a heavy burden on the Treasury while making only a small impact in curbing dollarization, with more than 60% of retail accounts sticking to hard currency. Moreover, some critics question even the legality of Treasury payments under the scheme, which will be covered largely with taxpayers’ money.

Lying at the core of the scheme is a government guarantee to make up for any losses that holders of lira deposits incur should the lira depreciate versus foreign exchange. The so-called FX-protected deposits were launched on Dec. 24 as part of emergency measures that President Recep Tayyip Erdogan announced on Dec. 20, hours after the lira hit an all-time low.

The currency had plunged into a tailspin in September when the central bank began cutting rates despite an uptick in inflation, heeding pressure from Erdogan, who holds the unconventional view that high interest rates cause high inflation. The bank’s four rate cuts in as many months totaled 500 basis points and brought its policy rate to 14%, pushing real yields deep into negative territory. The controversial policy fueled a rush for hard currency as people scrambled to protect the value of their money both against soaring inflation and the slump of the lira. The currency tumbled past 18 versus the dollar on Dec. 20, losing about 50% of its value since September. In the meantime, foreign exchange deposits came to account for 71% of all deposits in the country.

Following the announcement of the scheme, the lira rebounded, helped also by public banks selling hard currency to the market. The lira traded at 11.4 to the dollar on Dec. 24 as the scheme took off.

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Written by Mustafa Sönmez