Turkish President Recep Tayyip Erdogan said the market-friendly former finance minister Mehmet Simsek is leading an overhaul of economic policy, signaling a possible shift after next month’s elections if the ruling party stays in power.
(Bloomberg) — Turkish President Recep Tayyip Erdogan said the market-friendly former finance minister Mehmet Simsek is leading an overhaul of economic policy, signaling a possible shift after next month’s elections if the ruling party stays in power.
“We’re preparing to further strengthen our economic policies in the period ahead,” Erdogan said in an interview with 24 TV late Wednesday. “A team under the coordination of Mehmet Simsek, who participated in the economy’s management for years, is making preparations to that end.”
The Treasury and Finance Ministry and central bank are also making preparations, Erdogan said. “God willing, after elections we will bring all of them together and continue our path by fortifying our economy policy.”
A former Merrill Lynch strategist, Simsek was one of the last investor-friendly figures in Erdogan’s government that championed orthodox policies. The hint at his potential return comes as Erdogan struggles with a cost-of-living crisis that’s threatening his popularity in the run up to the May 14 vote.
The two men met last month in Ankara, stoking speculation that Simsek could take a role in government, but he said he wanted to stay out of active politics.
Unorthodox Policy
Since Simsek left office in 2018 and was succeeded by Erdogan’s son-in-law, the president has exerted heavier influence over the economy’s administration. He’s championed unconventional policies that prioritized growth at the expense of price stability and prompted an exodus of foreign investors.
Inflation soared to a 24-year high last year as the central bank launched an easing cycle, guided by Erdogan’s wish for low borrowing costs. The central bank’s foreign exchange reserves have also been depleted as policy makers try to stabilize the lira.
Incumbent Finance Minister Nureddin Nebati on Monday ruled out a return to orthodox politics after elections, saying in a televised interview: “We say that interest rates will not increase on May 15. There will be no change in our economy policy.”
Wall Street banks like JPMorgan Chase&Co and Goldman Sachs Group Inc expect a sharp reversal in monetary policy after elections, anticipating the benchmark interest rate could rise to at least 30% from the current 8.5%, according to a Bloomberg survey.
(Updates with context throughout.)
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