High inflation in Turkey
Erdogan’s new finance minister is pointing to a change of course
06/04/2023, 00:58
Erdogan puts together his new cabinet. The finance department is to be taken over by economist Mehmet Simsek. That could mean a departure from the country’s previous economic course. This could put the currently badly battered economy back on track.
Turkish President Tayyip Erdogan has partially reorganized his cabinet and signaled an economic turnaround. The economist Mehmet Simsek is to lead the finance department and get the country’s ailing economy back on track. Simsek is highly respected on the financial markets and is considered a representative of neoclassical rules of economic and financial policy. He was Finance Minister and Deputy Prime Minister between 2009 and 2018.
Simsek’s appointment should mean a departure from Turkey’s current economic course. It is considered controversial. Despite extremely high inflation, the central bank lowered interest rates instead of raising them in the fight against inflation. Behind it is Erdogan, who describes himself as an “interest enemy” and wants to push the economy in this way. However, the national currency, the lira, depreciated drastically, which in turn exacerbated the inflation problem.
Turkey has to import many goods and raw materials and pay with foreign currency. Due to the weak lira, these are in turn more expensive. The additional costs are passed on to the consumer. Experts have warned the economy is headed for turmoil if current policies continue as its foreign exchange reserves are depleted. High inflation is hitting people with low incomes particularly hard.
The authoritarian course is likely to remain
Former intelligence chief Hakan Fidan will become the new foreign minister in Erdogan’s cabinet. Fidan replaces Mevlut Cavusoglu at the post. Chief of Staff Yasar Güler was appointed defense minister. The previous Istanbul governor Ali Yerlikaya is to act as the new interior minister. Erdogan, who has ruled for 20 years, had previously been sworn in for another term. The 69-year-old, who was partly behind in polls, got 52.2 percent of the votes in last weekend’s runoff.
His five-year term will allow Erdogan to continue his increasingly authoritarian policies. This polarized the country but strengthened Turkey’s position as a regional military power. After the swearing-in in parliament, a ceremony took place in the presidential palace with high-ranking representatives from 78 countries and international organizations – including NATO Secretary General Jens Stoltenberg, Venezuelan President Nicolas Maduro and Hungary’s Prime Minister Viktor Orban.