Opposition parties say Turkey paying steep price for Erdogan's 'wayward' policies

WION Web Team
Ankara, TurkeyUpdated: Mar 23, 2021, 05:12 PM IST

(File photo) Turkish President Recep Tayyip Erdogan Photograph:(Reuters)

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Kavcioglu, who shares the president's unorthodox view that high-interest rates cause inflation, is Turkey's third central bank chief since mid-2019

Opposition parties in Turkey have slammed President Recep Erdogan's ''wayward economic policies'' due to which the country is paying ''a steep price.''

Erdogan dismissed Naci Agbal on Saturday, two days after the governor raised rates to curb inflation. Erdogan then appointed a critic of tight policy who is expected to reverse recent rate hikes, fuelling fears of political meddling in monetary policy.

The Turkish lira and stocks plunged Monday as officials tried to stem the carnage caused by President Recep Tayyip Erdogan's abrupt dismissal of his reformist central bank chief.

The lira lost nearly 15 percent against the dollar on the first day of trading after Erdogan replaced market-friendly economist Naci Agbal with former ruling party lawmaker Sahap Kavcioglu at the crucial post.

Kavcioglu, who shares the president's unorthodox view that high-interest rates cause inflation, is Turkey's third central bank chief since mid-2019.

"Turkey is paying the price for Mr Erdogan's thoughtless and reckless decisions with high-interest rates, unemployment and high inflation," Iyi Party chairwoman Meral Aksener told her party's lawmakers in a speech in parliament.

Erdogan recently announced an economic reform package but Aksener said it lacked credibility. She said Turkey's economic woes - with inflation above 15%, high unemployment and a gaping current account deficit - left no alternative to high rates.

"High-interest rates have become necessary. High-interest rates are a fever medicine, not a permanent cure. As the treatment is delayed, it is inevitable for the patient to die," said Aksener, head of the fifth largest party in parliament.

'Unprecedented incompetence'

Faik Oztrak, deputy head of the main opposition Republican People's Party (CHP), slammed what he called the AKP's "ideological blindness".

"It is truly unprecedented incompetence to cause the Turkish lira to lose more than 10 per cent in a single day two days after interest rates were raised," he told a Monday news conference.

Erdogan has not commented on the move but a deputy head of the AKP, Nurettin Canikli, said Agbal had been dismissed because he did not use monetary policy instruments rationally.

Aksener said her party supported Agbal prioritising price stability and faulted Erdogan's economic management, under a presidential system that came into force after a 2018 election.

"Turkey has no macroeconomic problems. Turkey has macro-Erdoganic problems... What is the solution? To immediately get rid of this failed system and return to a parliamentary democracy," she said.