Nureddin Nebati left the remains

AKP President and Chairman Recep Tayyip Erdoğan announced that Turkey has moved to the “new economic model” in a TV show he attended on November 30, 2021.

“With the new economic model, we are pushing back the policy of taking speculative money by paying high interest rates. We will support production and exports with low interest rates,” he said.

Then, on December 2, 2021, Treasury and Finance Minister Lütfi Elvan resigned from his post. Deputy Minister Nureddin Nebati was appointed to the post vacated by Elvan.

Following his appointment, Nebati shared on his Twitter account: “My Lord, make it easy, don’t make it difficult, my Lord, make it good. Give us truth in our work, make us successful. Mister. May my Lord grant us the ability to fulfill the duty of the Ministry of Treasury and Finance, which our President deems worthy of me, and be worthy of the trust that he has placed in us, I hope”.

Transferring his seat to Mehmet Şimşek yesterday, Nureddin Nebati said “Ohhh beee” and will continue his political life as an MP.

SÖZCÜ focused on the change in macroeconomic data over the 1.5-year period at Nureddin Nebati’s Ministry of Finance and Finance:

HE SAID ‘TL IS SHOWN TO THE BACKGROUND’, BUT…

The dollar/TL exchange rate, which was 12.96 on November 30, when Erdogan announced the ‘new economic model’, rose to 18.36 on December 20.

Efforts were made to maintain the dollar exchange rate, which was under pressure due to high current account deficit, high inflation and negative real interest rates, using CBRT reserves and indexing TL savings to foreign currency with deposits currency protected.

While the dollar was at 14.84 in March, Nabati said: “Turkish lira is at its lowest level, there is nowhere to go, citizens should be calm”… Nebati gave up the seat while the dollar was at the level of 21 lira. From where Nabati said there is nowhere to go, TL is down about 50 percent.

INFLATION ENDED SEVEN

Official annual consumer inflation was 19.25 percent in August 2021, before the CBRT began cutting interest rates. The CBRT policy rate was 19 percent. In November, when Erdogan announced the new economic model, inflation was 21.31%, while the policy rate was lowered to 15%. While Nabati was a minister, official inflation saw the new peak of the 21-year period of AKP rule.

FOR INTEREST INTEREST…

Although the Central Bank kept the policy rate at 8.5 percent, maximum levels of 20 years were observed in deposit and loan rates. In the pre-election period, the government opened the credit faucets at the expense of inflation and the current account deficit, but at this point, many citizens cannot access credit, while those who can face interest rates above 50 percent. Although using loans and buying a house and a car is now a dream for most of society, interest on deposits has reached the 40 percent level.

DEBT INTEREST EXCEEDED PRIMARY MONEY

While the central bank kept the policy rate constant at 8.5 percent, the interest and debt burden paid by the Treasury increased day by day while Nabati was in office.

For the first time in the history of the Republic, the interest debt of the public exceeded the principal debt. In the last three months, the Treasury repaid a total of TL 273.2 billion, of which TL 159.8 billion was internal debt and TL 113.4 billion was external debt. In these three months, 59 percent of the debt service consisted of interest payments and the remaining 41 percent in principal. In December 2021, principal payments amounted to TL 1.316 billion and interest payments amounted to TL 794.7 billion. In 2023, the Treasury is expected to pay a total of TL 1.1 trillion of internal and external debt.

CURRENT OPEN FOLDED

The government’s biggest claim in the new economic model was to have a current account surplus with the advantage of ‘competitive exchange rate’ achieved by keeping the value of TL low. However, the picture turned out to be the opposite due to the high prices of raw materials.

While the Turkish economy ran a current account deficit for 17 consecutive months, the 10-year peak was seen in February 2023 at $55 billion. In all of 2021, the current account deficit was $14.9 billion.

BUDGET DEFICIT EXPLOSION

The lax economic policy implemented during the Nureddin Nabati period destroyed the central government budget. The government, which spent a lot with the effect of the elections, gave a deficit of TL 132.5 billion in this April and TL 382.5 billion in the January-April period of this year. The budget deficit was TL 50.2 billion in April last year and TL 19.4 billion in the January-April period.