2023-06-04 03:20:24
Turkish President Recep Tayyip Erdogan
Turkish President Recep Tayyip Erdogan announced the formation of his new government, following his inauguration as president of the country for a new term, and the new government included major changes.
The Turkish president hinted that his newly elected government will focus more on more traditional economic policies, following appointing Mehmet Simsek as Treasury Minister in his government to address the cost of living crisis in the country and other economic challenges.
Analysts said the appointment of Simsek, a former Merrill Lynch economist, as treasury and finance minister might pave the way for interest rate hikes in the coming months, a marked shift in Erdogan’s long-standing policy of lowering interest rates despite rising inflation.
After winning a run-off election last weekend, Erdogan, 69, who has ruled the country for more than two decades, began his new five-year term by calling on Turks to put aside differences and focus on the future.
The new Turkish government also includes Cevdet Yilmaz, an economic official, as vice president, and the former head of the National Intelligence Service, Hakan Fidan, as foreign minister, to succeed Mevlut Çavuşoğlu.
In the Ministry of Defense, the Chief of Staff of the Armed Forces, Yasar Guler, succeeds the former Chief of Staff, Hulusi Akar, who took over the ministry since July 2018. Only two ministers remained in their positions in the new government, namely the Minister of Health and the Minister of Culture.
Erdogan’s inauguration ceremony at the presidential palace in Ankara was attended by NATO Secretary General Jens Stoltenberg, Venezuelan President Nicolas Maduro, dignitaries and high-ranking officials.
The apparent turnaround in the economy comes as many analysts say Turkey, a large emerging market, is heading for turmoil given depleted foreign reserves, expansion of the state-backed protected deposit scheme, and unchecked inflation expectations.
Şimşek, 56, was highly regarded by financial markets when he served as Finance Minister and Deputy Prime Minister between 2009 and 2018.
Archyde.com reported earlier this week that Erdogan was almost certain to put him in charge of the economy, marking a partial return to free market policies following years of increasing state control over foreign exchange, credit and debt markets.
“Simşek is likely to enjoy a strong mandate early in his term, but he faces mounting political headwinds with the speed of implementing policies as local elections approach in March 2024,” said Emre Peker, director at Eurasia Group Company, which covers Turkey.
Erdoğan’s economic program since 2021 emphasizes targeted monetary and credit stimulus to boost economic growth, exports and investments, putting pressure on the central bank to act and badly undermining its independence.
As a result, annual inflation reached a 24-year high of over 85% last year before easing.
The lira has lost more than 90% of its value in the past decade following a series of collapses, the worst in late 2021.
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