For the fourth consecutive month, the Turkish Central Bank kept the key interest rate at 14% in an attempt to contain the accelerating inflation driven by the collapse of the Turkish lira exchange rate and the war in Ukraine.
Turkish President Recep Tayyip Erdogan, who, contrary to classical economic theories, considers that high interest rates cause inflation, forced the Central Bank to cut the key interest rate from 19% to 14% between September and December, which led to the collapse of the local currency. .
The exchange rate of the Turkish lira fell by 44% once morest the dollar in 2021, which led to a rise in the inflation rate of 61.1% over a year in March, its highest level since Erdogan’s Justice and Development Party came to power in 2002.
In a statement, the Turkish Central Bank said that the process of decreasing inflation will not start before returning to a peaceful environment in the world.
Despite government promises to control inflation, the Ukraine war has raised fears of a new price hike; Turkey is an importer of Russian and Ukrainian wheat and relies heavily on Russia for gas.
Under these circumstances, Erdogan announced in early February a reduction of the value-added tax on basic food commodities, and then at the end of March a reduction in the same tax from 18% to 8% on hygiene products and restaurants.
Erdogan, who spent 19 years in power as prime minister and then president, hopes to be re-elected during the next presidential vote scheduled for June 2023.
(AFP)
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Turkey
The expert explained why the loss of the cruiser “Moskva” is irreplaceable
written by Alexandra Hartman Editor-in-Chief
Doctor of Military Sciences Konstantin Sivkov commented on the consequences of the incident with the flagship of the Russian Black Sea Fleet, the guards missile cruiser Moskva. Last night, the Russian Ministry of Defense reported that the cruiser sank in the Black Sea due to damage received during a fire and an explosion of ammunition. According to the expert, the loss of the cruiser will affect the defense capability, since right now it cannot be replaced.
“The loss is very tangible, I want to say right away without equivocation. In fact, our fleet has lost a third of its potential in the far sea zone,” leads NSN words of a retired captain of the first rank.
He noted that the cruiser “Moskva” had powerful weapons that met modern requirements, had the world’s first multi-channel air defense system “Fort”, and the combat range was regarding a thousand kilometers.
“And, of course, this is a serious loss for our fleet, a serious one. The reasons must be dealt with, the perpetrators must be punished, this is unequivocal,” the expert emphasized.
He also explained that right now Russia does not have the opportunity to replace this cruiser, since Turkey has blocked the Bosporus and Dardanelles. In addition, Sivkov drew attention to the fact that such ships are also needed in the Barents Sea, since the entire 62nd US Fleet is located there.
“The picture is the same in the Pacific Ocean. We can’t take them from there,” Sivkov concluded.
Turkish President sends congratulations to newly elected Pakistani Prime Minister
written by Alexandra Hartman Editor-in-Chief
AA / Ankara / Dilara Hamit
Turkish President Recep Tayyip Erdogan sent his congratulations to the new Pakistani Prime Minister Shehbaz Sharif on Monday during a telephone interview.
According to the Communications Directorate of the Turkish Presidency, Erdogan called Sharif following his swearing-in.
Sharif was sworn in on Monday following former Prime Minister Imran Khan was ousted in a vote of no confidence which he unsuccessfully tried to thwart. Imran Khan has maintained that he was the victim of a US plot to impeach him.
Erdogan wished that the results of these elections will be beneficial for the friendly and brotherly people of Pakistan. He said they are closely following developments in Pakistan, a country to which Turkey is bound by deep historical ties, friendship and brotherhood.
He also pointed out that Pakistan has not given up on democracy and the rule of law, despite all the challenges and difficulties it has faced. He added that Turkey is ready to extend any kind of support to Pakistan as it has always done so far.
Shehbaz Sharif, younger brother of former Prime Minister Nawaz Sharif and common opposition coalition candidate, won 174 votes in the lower house of Pakistan’s parliament, which has 342 members.
A minimum of 172 votes was needed to obtain a simple majority in Parliament.
Sharif’s opponent, former foreign minister Shah Mahmood Qureshi, who was the ousted prime minister’s Pakistan Tehreek-e-Insaf (PTI) party candidate, boycotted the election following his party’s decision to step down of parliament.
Ousted Prime Minister Khan and more than 120 PTI MPs have announced they are resigning from parliament and will ‘take on the imported government in the streets’.
These resignations will however only be effective when the President of the National Assembly has accepted them, in accordance with the country’s Constitution.
*Translated from English by Mourad Belhaj
Only part of the dispatches, which Anadolu Agency broadcasts to its subscribers via the Internal Broadcasting System (HAS), is broadcast on the AA website, in a summarized manner. Please contact us to subscribe.
Turkey’s current account deficit of $ 5.15 billion in February
written by Alexandra Hartman Editor-in-Chief
Data from the Turkish Central Bank showed, on Monday, that the country’s current account balance recorded a deficit of 5.15 billion dollars in February, more than double the figure recorded in the same month last year, as the increase in the cost of energy imports widened the scope of the deficit.
Eliminating the country’s chronic current account deficit, which stood at $14.9 billion in 2021, was among the primary objectives of President Recep Tayyip Erdogan’s New Economic Program which also prioritized growth, exports, jobs and interest rate cuts.
But the Ukraine crisis has raised the prices of oil, natural gas and grain, making it more difficult for Turkey to meet that target, given that tourism receipts may also fall this year due to a decline in arrivals from the two countries that are usually among the largest sources of tourists to Turkey.
The data showed that the deficit in the first two months of the year amounted to 12.14 billion dollars. The current account deficit recorded $2.42 billion in February 2021.
The latest Archyde.com poll forecast the deficit for the whole of 2022 would average $38.25 billion.
The Central Bank of Turkey data showed that the combined deficit for 12 months is currently $21.85 billion.
revenue share
In addition, an informed source said, on Monday, that the Turkish authorities are considering increasing the share of foreign currency revenues that exporters must sell to the central bank to reach 50 percent from 25 percent currently.
The source, who asked not to be identified, added that a final decision has not been taken so far. He said the authorities may decide not to change the current level or increase it in any amount, up to 50 percent.
Commissioning is limited to revenue in US dollars or euros.
In January, the government required exporters to sell 25 percent of their foreign currency earnings to the central bank, which is seeking to boost its reserves following a currency crisis late last year.
The amount of foreign currency that the central bank has purchased from exporters has not yet been disclosed.
The Turkish lira rose to 14.64 per dollar, following the Archyde.com report, from 14.7505 at the close on Friday.
Turkey’s total exports amounted to $225 billion in 2021. The government and economists expect exports to reach $250 billion this year.
The Turkish Central Bank’s net foreign exchange reserves hit a record low of $7.55 billion in January, mainly due to years of market intervention to prop up the lira. Reserves have tended to rise over the past three months.
The central bank has met market demand with at least $30 billion in foreign exchange since December through its reserves, as well as direct market interventions in 2019 and 2020, when it sold $128 billion to prop up the lira.
(Archyde.com)