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Sunday, December 3, 2023
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EconomyTurkey may phase out program that protects lira deposits

Turkey may phase out program that protects lira deposits

He added, in a television interview with (CNN Turk) that the plan could be extended beyond the end of this year, and that its immediate abandonment threatened a sharp drop in the lira exchange rate.

He went on to say, His country will take steps to reduce inflation and follow free market rules because it is working to increase competitiveness and productivity.

Since winning the election last month, President Recep Tayyip Erdogan has appointed a new finance minister and central bank governor who is expected to shift to more orthodox politics after years of lower interest rates fueling a crisis. of the cost of living.

Yilmaz said Ankara would maintain fiscal discipline and implement a coherent set of policies, adding, “We will take effective and decisive measures to fight inflation, which we see as the main problem.”

Inflation hit a 24-year high of 85.5% last October and fell to just under 40% in May.

In remarks this week, Erdogan said he was determined to bring inflation down to single digits under a “low inflation, low interest rate” policy.

Analysts at major investment banks now expect the Central Bank of Turkey to start raising interest rates at the June 22 Monetary Policy Committee meeting.

Erdogan has pursued unorthodox policies for years, aiming to turn the current account deficit into a surplus. But interest rate cuts despite high inflation triggered a currency crisis in 2021, and the lira has continued to fall since then.

The Turkish lira deposit protection program was credited with stabilizing the currency in early 2022, but it has come at a growing cost to the Turkish budget and its popularity has waned amid the continuing series of steep rate cuts central bank interest.

The Turkish currency has lost around 20% of its value against the dollar this year. Due to the central bank’s accommodative monetary policy.

Yilmaz said the government will work to achieve its investment, employment, production and export targets and is determined to eliminate the current account deficit from being an obstacle to sustainable growth.

The current account deficit widened to $5.4 billion in April and is expected to reach more than $45 billion this year.

Yilmaz said the government’s medium-term economic plan, which will be shared with the public in September, will reshape public policies and practices.

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The Eastern Herald’s Arab Desk validates the stories published under this byline. That includes editorials, news stories, letters to the editor, and multimedia features on easternherald.com.

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