Turkey’s new finance minister in the eye of the storm

ISTANBUL, Jan 17 (Reuters) – When Turkey’s new Finance Minister Nureddin Nebati was asked last month to elaborate on a move to stem the collapse of the lira, he found a new way to explain his strategy.

“I won’t give a number now,” he told a surprised TV interviewer. “Can you look me in the eye? What do you see?… The economy is the sparkle in the eye.”

For the man chosen by President Tayyip Erdogan to oversee and articulate his unorthodox economic policy of lowering interest rates in the face of spiraling inflation and a falling currency, the answer has typically been no. conventional.

Join now for FREE unlimited access to Reuters.com

Register

Six weeks into Erdogan’s top cabinet post, combining the finance and treasury portfolios, the 58-year-old minister confused markets with remarks on issues ranging from the inflation outlook to the Reserve US Federal.

“We put orthodox policies aside, now they are heterodox policies,” Nebati told companies two weeks ago, referring to the rate cuts, which run counter to mainstream economic theory that the Fighting inflation requires higher rates, not lower.

“We will not go on a path laid out for us by others but on our own path,” he said in one of the many speeches and television interviews he has given since taking over. its functions.

Government critics, including opposition politicians and foreign economists, say this path spells danger for Turkey and that Erdogan has further disrupted markets by appointing Nebati.

“Instead of inspiring confidence in the economy, you took steps that petrified everyone,” said nationalist IYI party leader Meral Aksener, addressing Erdogan. “As our nation is impacted, the ‘Comet Nebati’ you brought to the helm of the economy…speaks shamelessly of ‘the twinkle in his eye’.”

Even some sources close to the government expressed concern, saying Turkey could have chosen a more market-friendly figure to manage the economy in such turbulent times.

Nebati could not be reached for comment and a finance ministry spokesperson did not respond to questions about the minister’s role. Erdogan’s office did not immediately respond to a request for comment.

The Turkish lira has fluctuated wildly in recent weeks, hitting a record low of over 18 to the dollar last month, before rising to just over 10, then stabilizing at current levels of just under 10. 14 for US currency.

A senior official from Erdogan’s AK party said Nebati took office when the global economy was “in a difficult situation” and introduced new regulations, worked closely with the president and stemmed the crisis. collapse of the lira.

“Some pessimistic comments are being made, and I don’t think Nebati deserves that,” the official said.

“POSITIVE VICIOUS CIRCLE”

Nebati has made several startling statements since his appointment, falsely claiming that the US Fed is owned by five families. He also said that Turkey had entered a “positive vicious circle”.

Asked about a huge recovery in the lira after Erdogan announced last month that deposits could be protected from currency fluctuations, Nebati insisted that state institutions played no role in the surge, although official data indicates significant interventions in December.

Central bank figures showed its foreign currency holdings fell by nearly $20 billion last month. Although the bank reported no dollar sales on the day the lira jumped, analysts say half of the drop in reserves was the result of disguised interventions.

An AKP parliamentarian said Erdogan did not believe the deposit protection scheme had been clearly explained by Nebati and the government as a whole, and feared that, although it had boosted the pound, the impact early has stagnated.

Nebati, however, said demand for the program was strong and inflation would peak this month, before falling to single digits ahead of elections scheduled for mid-2023.

Born into an Arab family from the al-Naim tribe in southern Turkey near the border with Syria, Nebati studied political science and started the family textile business.

He served as a board member of MUSIAD, a religiously oriented business association close to Erdogan’s government, and as a lawmaker for the ruling AK party.

He was appointed deputy finance and treasury minister in September 2018, serving Erdogan’s influential son-in-law Berat Albayrak, whom officials say he was close to.

He remained after Albayrak’s dramatic resignation in 2020 and took office as minister last month following the resignation of Lutfi Elvan, the last Turkish cabinet or central bank figure seen as supportive of orthodox economic policy.

A businessman who dealt with Nebati when he was deputy minister described him as an extrovert and a “storyteller” with little direct economic training.

Nebati sometimes took the place of Albayrak to meet foreign executives wishing to invest in Turkey. On one occasion, Nebati “avoided questions from an executive and instead told stories from his childhood”, the businessman said, adding that the executive left without making any investment commitments.

Join now for FREE unlimited access to Reuters.com

Register

Additional reporting by Jonathan Spicer, Tuvan Gumrukcu and Nevzat Devranoglu; Written by Dominic Evans; Editing by Tomasz Janowski

Our standards: The Thomson Reuters Trust Principles.

Comments are closed.