Erdogan has a new finance minister – he promises a return to “rational” economic policy
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After the presidential elections in Turkey, financier Mehmet Şimşek was appointed to the post of finance minister, who announces a return to “rational” economic policy after years.
It is reported Financial Times.
Şimşek is a former senior bond strategist at Merrill Lynch, who has already headed the Turkish Ministry of Finance for the first time. Simsek previously served as deputy prime minister and finance minister, but left the government in 2018 when the country’s president, Recep Tayyip Erdogan, appointed his son-in-law Berat Albayrak as finance minister.
Erdogan brought him back into the cabinet on Saturday in a reshuffle that heightened expectations that Turkey will move away from unorthodox policies that have fueled a severe cost-of-living crisis and sent foreign investors fleeing the market.
Simsek has promised a return to “rational” policies after years of Erdogan’s economic strategy saw the lira fall to record lows.
“Transparency, consistency, predictability and compliance with international norms will be our main principles in achieving the goal of increasing social welfare,” he said. “Turkey has no choice but to return to a rational basis. We will prioritize macro-financial stability.”
“The appointment of Mehmet Simsek … increases the likelihood that (Turkey – EP) monetary policy will shift in a more orthodox direction,” Goldman Sachs said in a note to clients on Saturday.
Investors are now waiting to see if Erdogan will replace the leadership of the central bank. Incumbent Shahap Cavcioglu has made a series of sharp rate cuts at the behest of the president since he took over the bank in March 2021.
Another question is whether Erdogan will be willing to stick to a “rational” program if the central bank makes a sharp rate hike, which economists say is necessary.
We remind you:
The Turkish lira set a new low for the first time fell to a rate of 20 to the dollar ahead of the second round of the presidential election, which may end with the victory of the incumbent President Recep Erdogan.
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