Repeating Argentina’s economic mistake in Türkiye

According to the report of the International Group Tasnim News Agency,The Central Bank of Turkey, in recent days, once again started to reform monetary policies in a bold way.

The head of the Central Bank of Turkey, Mrs. Mehmet Ghaya, raised the bank interest rate again and increased it to 40%. Meanwhile, Erdogan previously considered this issue as a very sensitive red line and continuously tried to lower the interest rate. Why?

Because the voters of the Justice and Development Party are conservatives who consider the payment of bank interest to be in conflict with religious ideals and ethics, and Erdogan wants to preserve his voter base. They have noticed. But now 3 important events have happened that have left the central bank team free to raise the interest rate:

1. Erdoğan’s party has passed the election bridge and does not feel the need for it at the moment. He knows how to pay special attention to the demands and sensitivities of the conservatives.

2. Erdogan has promised to Mehmet Shimshek, the Minister of Treasury and Finance and the head of the Central Bank, that he will have nothing to do with them. and let them make an independent decision.

3. The skimmer has hit the bottom of the pot so much that it has pierced two or three places in the pot, and the government and people of Turkey are under the heavy burden of internal and external debt. , inflation, unemployment and foreign trade deficit are facing a critical situation and Erdogan has to show no resistance to the proposals and decisions of the economic team.

In most of the Turkish media, Argentina is known as a country that, in the biggest inflation crises, value It has lost its national currency and its leaders have tried every version and solution to get out of the deadlock.

Now Turkey’s economy is as bad as Argentina and the government One of the important solutions of Buenos Aires is to raise the bank interest rate so that the inflation rate will decrease a little. Economists believe that Erdoğan’s team, in order to overcome the economic crisis and inflation, based their work solely on raising the bank interest rate, but this strategy has already failed in Argentina.

The new economic management that came into place after the elections, turning to rational policies to curb inflation and set rates Currency based on the nature of the market put on the agenda. Mehmet Shimshek, the magic man of Wall Street in America and an expert on the Doha and London Stock Exchanges, made a bet for Erdogan at the first station and asked him not to interfere in economic decisions in any way.

His first statement announced: “Turkey has no choice but to return to a realistic policy and a rational basis”. , professor of economics!

Erdogan has a bachelor’s degree in management. But he always openly and without compliments declares that he is an expert in the science of economics. I have written”.

But with all these claims, Erdogan created a big crisis with two big blunders that has not left Turkey’s grip since a few years ago:

1. By resorting to the policy of simplification and reduction, Erdogan invented such a formula: when the bank interest rate is high, inflation will not come down. You have to lower the interest rate to destroy inflation!

2. Erdogan’s second blunder and big mistake was that he entrusted the entire helm of the country’s economy to his son-in-law Barat Albayrak and trusted him. . But he came to his senses when Brat used nearly 128 billion dollars of the central bank’s foreign exchange reserves in order to keep rate down Currency, he had sent the suitcase to the market and sold it at the price of 7 liras. But the resources ran out and now there is nothing left until the dollar becomes 30 liras in Turkey! In particular, foreign exchange was able to keep the dollar rate below 20 liras until the May elections. The dollar rate, which was 18.73 lira at the beginning of 2023, based on exchange rate Central Bank until the 28 Ardibehesht remained under the ceiling of 20 liras. But after the election, Fener was abandoned and now there are only a few khorosh left until it becomes 29 lira! /Image/1402/09/07/1402090716341986628869604.jpg”/>

Central Bank of the Republic of Turkey (CBRT) to restrain Exchange rate and inflation, announced two interest rate hikes in the last two months and raised profits for the first time in 27 months. This policy has been approved by economic activists and marketers, but there is no news of a reduction in the inflation rate.

Professor Dr. Ozgur Demirtaş, a famous Turkish economist, says: “Turkey should carefully examine the example of Argentina.” . If everything were to be fixed with just one bank directive, then anyone could become an economist! So this action alone is not enough and the problem will not be solved until we turn to structural reforms. Argentina constantly raised interest rates, but failed to control inflation. The reason for this is that this country forgot about other structural reforms.

Investigations on hunger and poverty lines in Turkey and in November, indicate worsening conditions for citizens to meet their basic needs. The Confederation of Turkish Trade Unions (TÜRK-İŞ) has announced that millions of households in this country are currently facing a terrible 4 digits:

Hunger line: 14 thousand 25 liras.

Poverty line: 45 thousand 686 liras.

The monthly salary of millions of people: 11,500 liras.

Annual food inflation: 80.12 percent.

The cost of living for a single employee: 18,239 liras per month.

These rates were announced in the context that Recep Tayyip Erdogan, the President of Turkey and the leader of the Justice and Development Party, a few days ago, To the disbelief of the journalists, he announced that the increase in the dollar rate in Turkey has ended and the government is making sure that inflation is not the topic of people’s daily conversation.

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