As of: 12/22/2021 12:19 p.m.
The inflation rate in Turkey has recently climbed to 21 percent, but the government wants to ban comments on market events on social networks. The finance minister calls them “treason”.
After the recent currency turmoil, Turkey wants to take legal action against “speculative market comments” on social media. “We will never allow such betrayal,” said Turkish Finance Minister Nureddin Nebati in an interview with the state broadcaster TRT Haber. The government is aiming for single-digit inflation, significant economic growth and a current account surplus.
The inflation rate rose to 21 percent in November. The opposition in parliament has even filed a criminal complaint against the Turkstat statistics agency for data manipulation after an independent analysis firm determined an actual inflation rate of 58.7 percent. Economists anticipate a further increase in consumer prices in the coming year. Then the official inflation should reach the 30 percent mark.
Erdogan wants to better protect savers
The background to this is the decline in the local currency, the lira, which this year has lost more than half of its value against the dollar and the euro. This makes imports – of oil and medicines, for example – more expensive because they usually have to be paid for in foreign currency. Experts explain the crash of the lira with the unorthodox monetary policy of the central bank. On the instructions of President Erdogan, it has lowered its key interest rate from 19 to 14 percent since September, although it has been proven that high inflation rates can only be combated with higher interest rates.
Erdogan has declared war on interest and invokes the ban on interest in the Koran. The president wants to boost exports, credit and growth with low interest rates in order to improve his chances in the presidential elections in 2023. But the collapse of the currency and high inflation harbor social explosives, as they are robbing millions of Turks of their savings. Interventions by the central bank in the foreign exchange market, where it sold dollars, quickly fizzled out and proved ineffective.
On Monday, Erdogan announced that in order to protect savers, the difference between lira investments and comparable dollar investments will be paid from the treasury in the future. The lira then recovered vigorously by up to 30 percent. How sustainable this measure is remains to be seen.