Turkey’s new finance minister, Mehmet Simsek, was warmly welcomed to his new office about a month ago. He will now guide his country back to “rational” fiscal policies and fight inflation, the report said. However, so far there is not much to see. The Turkish lira hit a new all-time low on Monday.
26.36 lira was due per US dollar. The currency has thus reached its lowest value since the currency reform in Turkey in January 2005. The change in the financial policy of President Recep Tayyip Erdogan has apparently had no effect so far.
Experts do not believe in the official inflation rate
Official inflation peaked at 85 percent in October last year and has been falling ever since. In June, however, that was still 38.2 percent compared to the same month last year. Independent experts also assume drastically higher rates in reality – for example, more than 100 percent in June.
Economists expect Erdogan’s election promises could become expensive. Due to measures such as the assumption of gas costs by the state, Turkey’s public debt reached a new record level in June.
Key interest rates have risen to nearly 15
After his re-election in May, Erdogan appointed liberal economist Simsek as finance minister and Wall Street banker Hafize Gaye Erkan as central bank governor. Economists hoped for a return to conventional fiscal and economic policies after Erdogan spent months resisting higher interest rates. The central bank then doubled its policy rate to almost 15 percent in June. However, no major decisions have been taken so far, apart from the tripling of fuel excise duty.
Source: Krone
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