Questions over missing foreign currency reserves rattle Erdoğan - Bloomberg

Questions over $128 billion allegedly missing from Turkey’s foreign currency reserves have rattled President Recep Tayyip Erdoğan, Bloomberg said on Thursday.

Critics say the vast sum of money was spent by the Treasury and Finance Ministry in a desperate effort to save the value of the lira under the tenure of Erdoğan’s son-in-law, Berat Albayrak.

Using foreign exchange to defend the value of a currency is not unusual, but the scale of the spend has raised eyebrows. If borrowing by local banks is excluded, Turkey’s international reserves are now below zero, according to Bloomberg.    

The main opposition Republican People’s Party (CHP) recently stepped-up political pressure over the issue, erecting signs asking: “Where is the $128 billion”. The campaign prompted a strong reaction from authorities, with police intervening to remove banners from CHP offices across the country.  

Erdoğan hit back over the criticism on Wednesday, saying significant foreign currency transactions were necessary due to the COVID-19 pandemic and global economic downturn. Similar measures would be taken again if necessary, he said.

The president’s response was a rare admission from a government that rarely explains its decisions or owns up to its mistakes, and showed Erdoğan was politically vulnerable over the issue, Bloomberg said.

The government recently suggested it could publish data proving there was nothing to hide over the controversy. But there are still inconsistencies in the official account, according to Bloomberg.  

No foreign currency reserves had been sold since Albayrak left office in November, the news outlet said, citing new Treasury and Finance Minister Lütfi Elvan. This despite government officials insisting the sales were a necessary response to the pandemic.

COVID-19 cases continue to rise in Turkey, reaching record highs in recent weeks. Meanwhile, the value of the lira continues to hover just above the record low it reached under Albayrak, despite the massive outlay in foreign currency under his leadership.   

Turkey’s citizens and foreign investors would like to know what happened, Bloomberg said.