Reuters: There will be no ‘new economic model’ in the electoral manifesto

As the AKP prepares to take a step back from current economic policies in the election declaration that it has been working on to give it its final form, Mehmet Şimşek, one of the former finance ministers, highlights his steps to return to orthodoxy. policies with an emphasis on free markets.

Four officials briefing Reuters said that Turkey’s current economic policies and economic model, which caused foreign investment to drop to near zero in some areas, were “not included” in the election manifesto because they were against the conditions of free market.

It is not possible to speak of a current account surplus in the current economic model, whose objective is to create a current account surplus by supporting investment, production, employment and exports. By contrast, even in January alone, a monthly current account deficit of $10 billion formed.

The sources, who did not give their names because they are not authorized to make official statements on the subject, point out that “several priorities such as the rules of the free market economy and practices parallel to the world economy” are included in the economics section of the chose. manifest.

‘WITHOUT REFERENCES TO THE TURKISH ECONOMY MODEL’

A government official said: “The work on the election manifesto has reached the final stage… The economic focus on the economy is very similar to that of the 2002 election manifesto of the AK Party. In other words, the AK Party is going back to its origins, in a way. There is no indication of non-market practices in the statement,” he said.

A senior AKP official, noting that Erdogan is working on the statement, said: “The election manifesto does not make any reference to the recently implemented New Model of Turkish Economy. There are several emphases, such as the principles defended by the former AK Party, the fight against inflation, accountability in the public sector and transparency in tenders.

When asked by Reuters, there was no statement from the AKP.

INFLATION EXPLODED

The Central Bank (CBRT) plays a decisive role in foreign exchange, Treasury bonds, foreign exchange distribution of deposits, corporate and individual loans. In other words, many variables in the economy are under the control of the public.

After the strong depreciation against the dollar in recent years, although the LT followed a horizontal course under public control, inflation reached 85 percent, the maximum in 24 years, in this process. The decline in people’s purchasing power, on the other hand, severely damaged the popularity of the Erdogan government. Although inflation has recently fallen to 55 percent, the policy rate is in the single digits, which means a large negative real interest rate policy.

Foreign investors have been quite disinterested in Turkey in recent years, claiming that these practices are contrary to liberal market conditions. The share of foreign investors in the TL-denominated bond market, which reached 25 percent during the period when Mehmet Şimşek was also at the helm of the economy, has fallen below 1 percent these days. While foreign ownership of shares is declining, Western capital, especially swap capital, is quite reluctant to take a position in Turkey under current conditions.

While this preference for foreigners led to an economic structure that excludes tens of billions of dollars of financing, Erdogan had previously defended the current system on the grounds that it was “independent” politics.

Foreigners, on the other hand, have long stated that they are waiting for the day when free market conditions emerge to return to Turkish markets.

THE RETURN OF MEHMET SIMŞEK

“Erdogan somehow wants to overcome this troubled period in the economy with Şimşek,” another source said, adding: “Şimşek currently holds various positions in some large international companies and funds. He came once, he served as a minister for 11 years, I don’t know if he will do it again. However, let’s say that he has returned to the cadres of the AK Party, and I am sure that he will take the words very seriously… I can say that this means a change in all those who are at the top of the bureaucracy”.

The presidential and parliamentary election process, which will take place on May 14, was followed as the main item on the agenda, since it could generate great changes in the economy of the markets. Although there were opposing views, the general expectation was that the government would continue with its current economic policies at least until the elections and after the elections if it wins.

The opposition’s adoption of more conventional government policies in the economy made the electoral process more important to the markets. Furthermore, polls indicate that this election may be the most challenging in Erdogan’s 20-year rule.

A senior official said: “The president wants to work with Şimşek on the economy again. A statement is drawn up in accordance with his policies. The draft is clearly written in such a way that he will not object. The economic policies of his time as minister are clearly written in the draft declaration. We can list many advantages of being him in managing the economy. There will soon be a movement (for discussion) on this issue,” he said.

An official said Erdogan is considering the vice-presidential job for Şimşek.

Şimşek could not be reached regarding the matter. (Reuters)