In Turkey new cost saving measures are selective

“Arrival of Recep Tayyip Erdogan, President of Turkey” by G20 Argentina is licensed under CC BY 2.0

President and ruling Justice and Development Party (AKP) Chair Recep Tayyip Erdoğan issued a circular on June 30 instructing officials to reduce expenditures. The cost reductions would apply to all real estate developments, constructions, purchases, and leasing by public institutions, which will be halted immediately, according to reporting by Hurriyet Daily News. As the president introduced cost-savings initiatives, the first lady, Emine Erdoğan, recommended that citizens cut their food consumption, while speaking at the Ministry of Agriculture and Forestry's “Protect Food, Protect Your Table” event the same day. But just as the cost reductions exempted the president and the parliament, so did the first lady's advice. References to her taste for expensive bags and spending habits surfaced on Twitter, with users criticizing the hypocrisy of the new measures.

Emine Erdogan: Come, lets reduce our portions.

Emine Erdogan who is using 40,000USD Hermes handbag, is saying “come, let's take simple measures: let's prepare a shopping list before going to grocery stores, and reduce our portions.

The same day, the government also announced a 15 percent rise in electricity prices and a 12 percent rise in residential natural gas prices.

Discussing the circular at a parliament press conference, Peoples’ Democratic Party (HDP) Group Deputy Chair Saruhan Oluç said the new measure is nothing but a “bankrupt's certificate” or an “arrangement of bankruptcy.” Adding, “There is a fast move towards bankruptcy; they have perhaps already gone bankrupt but have not yet fully announced it.”

CHP Party Spokesperson Faik Öztrak, mocked the ruling party's new measures in a tweet.

The appointed Minister of Internal Affairs said, “Our economy will take off in July. Germany, America will be jealous of us,” turns out this is what he meant when he was sharing the good news. As of July 1, electricity prices have increased by 15%. There is no other government in the world that mocks the mind of its citizens as much.

Speaking in Turkey's Afyon province on June 5, Minister of the Interior, Süleyman Soylu said, “You will see, as of July, our economy will take such a leap and growth in July that Germany, France, England, Italy and especially the USA, which meddles in everything, will crack and explode.”

Three days prior to Soylu's visit to Afyon, the Turkish lira hit a fresh low against the dollar.

Former Prime Minister, Ahmet Davutoğlu also joined the wave of criticism against the decision to raise electricity and gas costs in a tweet:

As if monthly prices hikes on natural gas were not enough, they have introduced 15% increase on electricity costs. It is as if the government vowed to do what it can to take whatever the citizens have.

Others criticized the decision to establish the Price Stability Committee, which was announced on June 30 in a presidential decree. The new committee was set up to help the country to fight inflation which has consistently been in double digits in recent years. According to Hurriyet Daily News, the committee includes the ministers of treasury and finance, trade, labor and social security, energy and natural resources, industry and technology, and agriculture and forestry, as well as the Central Bank government, and the chief for strategy and budget under the presidency. “This is what happens when the president takes away the central bank's ability to use interest rate policy independently,” wrote the economist Timothy Ash in a tweet:

President Erdoğan has replaced three Central Bank governors since 2019, demonstrating his grip over the Central Bank and its monetary policies. The most recent replacement occurred through an overnight decree published in the Official Gazette in March of this year, when Naci Agbal, a former finance minister was replaced with Sahap Kavioglu, a banking professor and columnist in a government newspaper. While there were no official explanations for this replacement, pundits said the sudden replacement was linked to Agbal's decision to raise interest rates, which goes against President Erdoğan's unorthodox theories about monetary policy and its impact on inflation. Agbal was in his position for just four months before getting replaced by Kavioglu, who happens to share the president's views on monetary policy. Under Agbal, the Turkish lira was indicating a recovery as he raised the interest rate to 19 percent from 10.25 percent since taking over the office in November 2020

In an interview with BBC, Jeffrey Halley, a senior market analyst at currency exchange firm Oanda said, “The base premise of Erdonomics is that higher interest rates cause higher inflation, a theory that flies in the face of conventional economic theory everywhere.”

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