3 major challenges of economic austerity in Türkiye

According to the international group Tasnim news agency, at the same time as the economic crisis continues in Turkey, the see-saw dollar price between 32 lira and 33 lira has worried everyone. 

Domestic and foreign predictions about the comparison of the Turkish lira and the dollar rate indicate that, contrary to promises, there will be no increase in the value of the Turkish national currency.

JPMorgan Financial Institute believes that by the end of this year, the dollar in Turkey will exceed 35 lira, but Bank of America and HSBC also say that the new rate will be between 38 and 40 lira.

Now a little more than a year has passed since Erdogan’s cabinet and he, who promised to lower the dollar from 20 liras during the election, was not even able to maintain that rate and the dollar reached an unbelievable price of 33 liras. It increased inflation and psychological pressure on the Turkish market and society.

It was in such a situation that Mehmet Şimşek, an elite Turkish economist and specialist in the financial markets of Wall Street, New York, London and Doha, under the present condition became the minister of Erdogan’s cabinet so that the president does not interfere in any of his decisions.

Erdogan kept his word and Shimsek also used these two solutions to organize the crisis-ridden economy of his country. has undertaken:

a) attracting foreign investors.

b) reducing Current government spending and adherence to a large-scale Kurd spending directive package called the economic austerity package. newsmedia.tasnimnews.com/Tasnim/Uploaded/Image/1402/08/23/1402082314150418728766564.jpg”/>

As a strict orthodox economist, Mehmet Shimshek does not hesitate to call him They are called a stingy and dry-fingered minister who even spends on the purchase of newspapers for the country’s political and administrative officials and has locked up a significant part of expenses for stationery, desks and chairs, and gas money for organizations.  

However, he has not been very successful in attracting foreign capital and has focused more on reducing costs. But the economists of Turkey believe that the savings intended by the minister will not help to solve the crisis and considering the heavy amount of debt and other structural problems, with these few koros and liras, it is not possible to solve the big problems of billions.

The first challenge: the institution of the presidency

The institution of the presidency Turkey is located in a huge palace called Beştepe in the capital Ankara. This palace has 1,200 rooms and its large expenses have been the focus of the media.

In a special report, the high-circulation Suzjo newspaper of Ankara announced that even in the days of economic austerity has ruled the country, there is no news of frugality and austerity in the presidential palace.

Hundreds of luxury and expensive foreign cars are still in circulation, Erdogan has dozens of advisors with astronomical salaries. Foreign and domestic trips with luxurious air squadrons and ground bulletproof convoys cost millions of liras, and the government believes that reducing the expenses of the presidential institution may harm the prestige and glory of the country!

Morad Yetkin One of Turkey’s famous political analysts wrote in his latest note about economic austerity: “Mehmet Şimşek, Minister of Treasury and Finance, along with Vice President Judet Yilmaz, announced general austerity measures on May 13. Both of them especially emphasized that they prepared these actions with the order and approval of President Tayyip Erdoğan. But now it is clear that it is Erdogan himself who does not adhere to the principles of austerity! Neither Shimshek nor Yilmaz could say that exactly how many lira and how many kuroush have been reduced from the multi-billion expenses of the presidential institution! Apparently, this economic austerity is only for ordinary people and insignificant offices of Turkey and does not include the legendary and luxurious life in the presidential institution”.

The second challenge: the municipalities of the ruling party

One ​​of the big challenges in the political-executive structure of Turkey is the state of the municipalities. Usually, a municipality is completely under the supervision and guidance of the party whose mayor came to power with the support of that party. Meanwhile, in 2024, many party mayors Erdogan could not get votes from the people and their seats were given to the opposition parties. But it soon became clear that these municipalities incurred huge debts. Second, strange luxuries were observed that have nothing to do with the duties of the municipality.

For example, the same conservative mayor who is pro-Duatse Erdoğan, who promised that if he wins again, every month to give half a gram of gold to the housewives, he failed in the election and the new mayor of Sinjag Tepe, when he took over the office, found out that the mayor had built a swimming pool, a Turkish bath and a jacuzzi for herself in the small municipal building. . He was so sure of his re-victory that he did not destroy these facilities, and the publication of a video report of these facilities and similar examples brought huge margins for Erdogan and his party.

Big cost Municipalities under the Justice and Development Party in order to keep people happy and carry out populist and unnecessary projects is another challenge of economic austerity. 

Morad Sabunji, one of the analysts of T24 Turkish analytical news site, wrote: “The issue of economic austerity is like drinking a bitter medicine to the Turkish people. But unfortunately, this medicine has not cured. Why? It is clear because neither in the presidential palace nor in the municipalities affiliated to the Justice and Development Party, no one believes in frugality and they still continue to waste and squander.” 

Professor Selva Demiralp, a professor at Koch University, also says: “We have no problem with drinking bitter medicine.” But please be fair and take a sip yourself!”

Analyst Mehmet Kaya of Ankara’s Economy newspaper also wrote: “The possibility of saving 1 trillion lira in the public sector in 2024 with Tax reforms and economic austerity only mean a 6% reduction in the budget deficit and cannot solve much of the problem”.

Economi newspaper in a special report, “If President Recep Tayyip Erdoğan in 2018 gives you his son-in-law Albayrak was not made the Minister of the Treasury, there was no need for this bitter version. Our problem is that the Justice and Development Party has raised our costs both with extravagance and luxury and by imposing carnaval people on the economic structure of the country”.

Incomes and macro-economic rents for construction companies close to the Justice and Development Party is another aspect of this party’s challenging policy for Turkey’s economic austerity program.

Erdogan’s acknowledgment that his party has faced something more than defeat and loss of life and blood in the recent elections, how far the economic austerity will continue and what measures the government will take to make this program successful.

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