The amendment to the Decree No. 32 governing the Exchange Rate Regime, which was issued on Tuesday, clearly shows that the Administration sadly fails to see the root cause of the problem Turkey is facing right now.
Apparently drawn up by persons who know the mechanism of the State inside out yet lack of strong knowledge on the exportation, this amendment has upset everyone with a sense of logic and conscience, notably of course the exporters. I can guess the amendment, which basically stipulates that revenues from exports shall be used in accordance with the Government instructions, will probably be reamended soon due to harsh reactions.
Yesterday, I shared with you a 1985 article written by my late father and published in Milliyet newspaper. Recently referred to by Gungor Uras before his saddening demise, this article, aka a “list of warnings”, also set forth that the softening in the Law Regarding the Protection of the Value of Turkish Currency should never be reversed. Professor Erdogan has strongly underlined the importance of flexibility especially in foreign trade. As of Tuesday, however, Turkey’s exchange rate regime has lost its flexibility.
As known, many economists and experts, including myself, have provided the Government with a number of useful recommendations such as “issuing super bonds”, “postponing mega projects to a further date” and “reducing Government expenditure urgently”. But apparently, the Government wants the Private Sector to compromise.
“Questions in my mind…”
According to some people, it was absolutely necessary to make such an amendment, which has sadly confirmed the rumours on the future of Turkish economy that have been going on since the beginning of the summer. Long story short, this amendment will soon be withdrawn, helping the exporter breath a sigh of relief. But this is not the real problem here.
The real problem here is the fact that no one thought about asking for advice or consultation before making such a risky and easily misunderstandable decision. I really wonder this amendment was drawn up by whom? What were the arguments s/he presented before submitting it for the approval?
Who makes such irrational suggestions especially when we are going through financially difficult times? These are the questions in my mind right now.
