Surprising results of the local election in Turkiye

The Government’s economic policy was a palliative plan aimed at bringing exchange rates under control, not inflation. As I have said many, many times before, the Government was wrong to increase taxes constantly and make people suffer because of the soaring inflation. It was not ethically right to grant major tax amnesties while ignoring the hardship of the retirees.

It was not right to sell billions of dollars from foreign exchange reserves so as to control exchange rates. Letting the policy rate chase the inflation rate and not having done immediately what needed to be done was a big mistake. It was inconsiderate to implement a tight monetary policy while not tightening the belt as the Government. It was also a big mistake to set the inflation target at 36% and not having done what was necessary.

Ignoring the inflationary effects of the trade regime and customs practices was a tremendous mistake, not to mention letting the people of this country suffer financially so as to protect certain businesses and sectors. Buying even a mobile phone or trainers has become a luxury shopping. Today, Turkiye is the most expensive country in Europe. Since the exchange rates are controlled by the Government, sellers began to raise their prices arbitrarily. Inflation has become even stickier.

Due to the cost of credit, people became unable to run their businesses. Those who sold their goods began to live with the fear of not being able to buy them or a product of similar quality back for a reasonable price. The relative price balance is disrupted. The economy is still awaiting the promised funds from abroad and Turkiye is still on the FATF grey list.

Some might say, "This is all because of the previous economic teams." They are not entirely wrong, but the new team continued to make the same mistakes while pretending they were doing all the right things. The foreign exchange reserves are now at a lower level and inflation is much higher compared to the time when they first took office.

Turkiye has a balanced foreign policy with a strong stance, not to mention a stable internal security. Despite these achievements, the current economic team, which was gathered together with great expectations, is performing quite poorly.  If these policies are not changed soon, our economy will continue to suffer and our people with it. The only way to overcome this vicious cycle is to let exchange rates float and keep interest rates ahead of inflation.

If the members of the current economic team wish to keep their positions, they   better fix these failed policies. It’s time people who prioritise the public good over personal interests find a common and rational ground.