The Turkish economy lost more than one trillion liras ($42.8 billion) at the end of the first week of Finance Minister Mehmet Şimşek’s return to the helm, main opposition Republican People’s Party (CHP) MP Özgür Karabat said on Friday.
Turkey’s short-term external debt rose to 4.9 trillion liras from 3.9 trillion liras since the elections, Karabat tweeted. “So, the debt Turkey is obligated to pay within one year rose by one trillion liras. The budget for 2023 is 4.6 trillion liras, which shows us how big the danger is.”
The government was able to keep the exchange rate at 19 liras per dollar “with great difficulty” ahead of the elections on 14 and 28 May, Karabat said. “Then they slowly let foreign currencies loose. At some point in the dollar’s rise, they will probably pull the gun that is interest rates, stop the rise and invite back hot money. But this will not turn into investments, they will take their short-term interest and leave. That is the plan.”
“The budget deficit, imbalance in foreign trade, dependency on imports, financing difficulties, entrepreneurs holding back, the youth lacking faith in the future and dozens of other problems remain, so Şimşek will only be a distraction,” the deputy said.
The newly appointed minister, who had served as economy minister in previous Justice and Development Party (AKP) cabinets as well, affirmed the AKP government’s commitment to “rules based policy making to enhance predictability” in a Twitter message on Wednesday. “While there are no short cuts or quick fixes, rest assured that our experience, knowledge & dedication will help us overcome potential impediments ahead,” Şimşek said.
Shortly after the English-language tweets, the minister urged citizens to “not heed any gossip in circulation or any news on our practices and policies that you did not hear from me” in a tweet in Turkish.
Economists had anticipated that the liberalisation of the currency after the elections would halt the decline in net reserves. However, the Central Bank’s IMF-defined net international reserves decreased by $1.3 billion, TELE1 reported, resulting in net reserves falling to -$5.7 billion.
The reserves were being sold to slow down the depreciation of the Turkish lira, which had experienced a modest 10 percent decline in value between September and June, compared to its plummet in previous years. However, following the second round of the election, the lira’s depreciation accelerated, with a nearly 20 percent decline occurring in just two weeks.
Adding to the country’s economic woes, Turkey is now grappling with a new wave of price increases. Tea prices have risen by 43 percent, while analysts predict further hikes in the price of essential commodities, including gasoline, flour, bread, pasta, and bottled water.
