Erdoğan adviser slams critics for saying economics less predictable

Turkey's economic policies, including monetary and fiscal policy, will be clearer after June 24 presidential elections, not less predictable, as some ratings agencies and analysts have warned, said Cemil Ertem, senior economic adviser to President Recep Tayyip Erdoğan.

Turkey’s growth strategy and investment environment will also be more defined, Ertem said in his regular column for Milliyet newspaper on Tuesday. It is the economic policies of the United States and European Union that are unpredictable, not Turkey’s, he said.

Some ratings agencies and analysts have warned that Turkish economic policy will become more difficult to foresee after the elections, pointing to increased powers that Erdoğan will have under Turkey’s new presidential system of government. Erdoğan’s growing autocracy has also spilled over into monetary policy as he sought to lower interest rates and support economic growth, they say.

Rate increases by the central bank prove that the bank is independent and autonomous, Ertem said. That independence should, however, never be for independence sake, but must always be practiced in line with general aims shared by the government of increasing economic prosperity and living standards, he said.

Steps taken by the central bank this week to simplify monetary policy should also end criticism that its policy framework was too complex, Ertem said.

Turkey’s central bank simplified monetary policy on Monday by making the one-week repo rate the sole benchmark interest rate of 16.5 percent from June 1, though it retained an interest rate corridor, with a borrowing and lending rate 150 basis points either side of the benchmark.

The flexible interest rate corridor, introduced under former governor Erdem Basci, has been criticized by some economists for being too prone to political influence and less effective in reducing inflation. Turkey’s inflation rate is 10.9 percent, more than double the central bank’s goal of 5 percent.

The government will also streamline economic decision-making after the election, Ertem said.