The Turkish ruling party, the Justice and Development Party (AK Party), criticized the opposition bloc’s pledges to end or back down current government’s economic policies in In the event of her victory in the upcoming elections, saying that her promises will backfire and just add burden on budget.
hiring for May 14 presidential and parliamentary vote He will meet President Recep Tayyip Erdogan, also the head of ruling party and face Commander Kemal Kilicdaroglu of Republican People’s Party (CHP), who He was chosen by the disparate opposition parties as their joint candidate.
the six-party Nation Alliance – better known as “The Table of six- has vowed to reverse a lot of Erdogan’s signature policies. The bloc promises a return to parliamentary democracy, roll back the current government’s economic policies are introducing a major shift in foreign policy.
It promised to end the politics that interfered with Floating drainage system, including a government Scheme protects Turkish lira deposits against Currency depreciation.
Bloc also Looking forward to reversing the government’s economic policies program that prioritizes low interest rates to boost exports, production, investment and innovation new Careers. the program It aims to reduce inflation by chronic flipping of the country current account deficit into surplus.
Forex protected lira scheme
Stopping the state-backed scheme, known by its acronym KKM and aimed at curbing the depreciation of the lira, would encourage a shift to foreign currency and eventually cause the price of United State dollar Deputy Vice President Nurettin Canikli said head of Justice and Development Party.
In such a case, table of six He has no choice but to increase interest rates so that price of the dollar does not happen out of Cankli Books on Twitter on Monday.
a statement in In late 2021, the scheme sought to keep dollarization at bay through encouragement people to preserve their savings in Lira through compensation guarantees for losses from decline of Turkish currency. The lira depreciated by 30%. against United State dollar last year and 44% in 2021.
On the side of the Republican People’s Party led by Kilicdaroglu, the opposition coalition is made of Meral Aksener National Righteous Party, Temel Karamoulaoglu conservative Felicity Party (SP), Gültkin Uysal Democratic Party (DP), Democracy and Progress Party (DEVA) led by Ali Babacan and Future Party headed by Ahmet Davutoğlu.
Canikli emphasized that, to a large extent, the KKM managed to keep it in check people’s demand for foreign currency, which ultimately helps reduce stress and volatility in exchange rate.
“in factIt greatly relieved pressure on foreign currency by converting some of Foreign currency deposits in pounds. So far, she has made An important contribution that should be taken into consideration in Transition to reverse currency exchange (reverse dollarization).
Canikli further suggested that the end of The chart will see each money which are compiled to direct to foreign exchange.
“Table of six That would spark interest rate To the rate This will prevent households from switching to foreign currencies, at least above the level of inflation rateHe don.
Canikli said coalition’s post-election program Indicates that the opposition will seek favorably real interest rate policy, which means that the block will support an increment in Borrowing costs higher than inflation.
In return, Erdogan called for Lower borrowing costs in Try to promote economic growth, investment and exports, and insist on those interests rate walking long distances cause economic inflation.
Turkey has it now real interest rate of negative 46.68% when adjusted for Inflation, which fell to 55.18%. in February, recording a marked decline from the peak of 85.5% – 24-year High – registered last October.
The Nation Alliance promised to bring inflation down to single digits within two years and restore stability of lira.
He. She also Pledge ensure independence of Center bank and roll back Measures such as allowing the cabinet to choose the governor.
Central last month bank lowered her policy rate by 50 basis points 8.5% to support growth after last Destructive earthquakes occurred in the month, saying that borrowing is cheaper cost will reinforce recovery efforts. This raised the overall facilitation trend to 550 basis points Since August last year.
Canikli insisted on the negative real interest rate It enables borrowing at much lower costs and relieves stress on the budget.
He said the treasury was currently Borrowing at very low interest rate of 10%-11%. Considering that inflation rate At 55%, it can be seen that the treasury is borrowing with Great advantage of negative real interest.”
If the Treasury sought to borrow with positive real interest ratethe cost Canikli suggested that at least 56%.
“This is the interest rate It would have risen to at least one percentage point above the rate of inflation rate. more in interest rate It will negatively affect the treasury, i.e. budget, and the interest burden on the Treasury will increase, he stressed.
The treasury will be faced with huge amount of additional interest burden.
“through the roof”
Canikli noted out That gap between interest costs of Borrowing and interest rate policy with The potential opposition measures would be about 284 billion Turkish liras ($14.97 billion).
The year 2023 budget He doesn’t have any money set aside for additional interest payments of 284 billion Turkish liras. question which should Here he asks: How will the schedule be of six get this money? Crankly said, citing what he said were two possibilities.
First, he said, central bank could directly Or indirectly finance additional interest payments, but he noted the bloc could not use this option.
(Because) according to the monetary undertaking under policy Title in With their consent, they committed themselves not to do anything that would cause Monetary expansion,” Canikli stressed.
Also, Canikli considers that the bloc will consider approving the standby deal with The International Monetary Fund, which said it would not allow Any action would cause the money Supply to increase because monetary tightening is a key part of Lending 190 countries organization’s programs.
other optionaccording to Canikli, it will be for Locker to choose for loans for Pay the extra interest.
“Table of six he does not have chance to use this option Either,” he said. “At a time when it was money policy that confirm monetary stress in place If the treasury came in money market as a buyer of 284 billion TL, interest rates will exceed the limits.
Cuts in social spending
Considering that the opposition will do follow International Monetary Fund programCanikli said that this would only mean a reduction in spending on investments social programs And social protection.
“social programs are the resources that go to those in need. Social security spending is the resources that go to the SGK (Social Security Institution) for pension payments,” he said.
Canikli suggested it higher costs that may come with high interest rate policy Which the bloc pledged to implement will come to an end up in drop in social spending.
This means the table of six won’t be able to afford it pension payments of EYT Citizens,” referring to the acronym of arrangement mode forward By the Justice and Development Party which abolishes the age requirement and offers early retirement on millions of Citizens.
Parliament earlier this month approved the measure allow over 2 million workers to retire in the first stage was one of the key Election pledges of verdict party.
“the risk of Inability to afford the costs pension payments and even public Servants’ salaries are something also came to the agenda in The past, Canikli said.
“When a large portion of the budget Credits transferred (up to 43%) for interest expenses in periods in which it is share of interest payments in the budget It was high, it was the state difficulty Finding resources for investment, social regions and social Security,” he explained.