Wed, 06 Dec 2023

© Provided by Xinhua

by Burak Akinci

ANKARA, Sept. 25 (Xinhua) -- Türkiye's shift to more conventional economic policies in recent months has fueled cautious optimism, yet the crisis-hit nation faces significant challenges toward recovery, experts have said.

Turkish Finance and Treasury Minister Mehmet Simsek revealed on Sept. 19 that Türkiye obtained some 10.4 billion U.S. dollars in external financing since the country embraced new policies in June.

"This is the clearest indication of confidence in the country's economy," Simsek told the semi-official Anadolu Agency in New York, where he met with international investors during a trip accompanying President Recep Tayyip Erdogan for the United Nations General Assembly.

The amount includes 6.7 billion dollars from the banking sector, 367 million from the non-banking financial sector and 3.26 billion from the real sector, according to the report.

"This shows that the return to orthodox and rational economic policies increased the interest of foreign investors" to Türkiye, Murat Sagman, an Istanbul-based economist and consultant, commented on his X account, formerly known as Twitter.

© Provided by Xinhua

Earlier, a top World Bank official in Türkiye said the country started to make "steps in the right direction," seeing signs of a potential reversal of unorthodox policies that have spawned a cost-of-living crisis in the country.

After the new economic management put in place in June decided to aggressively hike interest rates from 8.5 to 30 percent to curb inflation and boost taxes to fight the budget deficit, there seems to be hope for a turnaround.

Humberto Lopez, the World Bank's country chief for Türkiye said in an interview with Anadolu Agency on Sept. 7 that his organization is anticipating presenting a new support program of 18 billion dollars over the next three years to help the Turkish economy.

The country's annual inflation rate neared 60 percent in August and is expected to remain high by the year-end.

"Without a doubt, international markets have welcomed Türkiye's shift towards more rational policies," Can Selcuki, an economic analyst and director of the Istanbul-based Türkiye Raporu, which publishes a monthly report on Turkish public opinion, told Xinhua.

In Selcuki's view, import-reliant Türkiye is paying a "high price" for unconventional policies launched in late 2021 to fight inflation with low borrowing costs.

Favorable to low interest rates, Erdogan has backtracked from a rate-cutting course following his electoral win in the May general elections as his country faced economic strains and a currency decline.

The Turkish leader appointed his loyal ex-minister Simsek at the helm of the economy and a former Wall Street banker, Hafize Gaye Erkan, as central bank governor.

The new team aggressively increased interest rates and began freeing forex markets as well as raising taxes on scores of products to help the country's weakened finances.

Erdogan, following his visits to India for the G20 Summit and to the United States for the UN General Assembly gathering this month, said that foreign observers view the new economic program positively.

"Through fiscal discipline and structural reforms, we will make our economy resilient to any kind of storm," he stressed.

© Provided by Xinhua

But improvement is not around the corner and will be painful for consumers, according to Selcuki, as a public expenditure spree ahead of the May election such as substantial wage and pension hikes, has made Türkiye's woes worse.

The post-election turn toward orthodoxy can not magically regenerate the reserves that were spent over the past months, he argued.

"Türkiye has had a big feast but now the restaurant owner has brought the bill and someone needs to pay it," he said, adding that consumers will have to suffer for several more years until some improvement is achieved.

February's deadly earthquakes in southern Türkiye have further deepened the nation's financial troubles.

Meanwhile, cash-strapped Turks could face more hardships next year as analysts expect the government to unveil harsh belt-tightening measures following local elections set for March 2024 where Erdogan seeks to retake control of major cities, including Istanbul and Ankara.

"A tight austerity program" is to be implemented with a significant increase in interest rates, new taxes, and wage freezes to achieve stability, economist Erdal Saglam said in a report for the private Anka news agency.

More Fort Worth News

Access More

Sign up for Fort Worth News

a daily newsletter full of things to discuss over drinks.and the great thing is that it's on the house!