Turkey to freeze new government projects
ISTANBUL: Turkey is freezing new government investment projects, President Tayyip Erdogan said, to rein in spending and stem double-digit inflation after a 15year construction boom fuelled by debt.
His comments, a day after the central bank hiked interest rates by a mammoth 6.25 percentage points, mark the clearest signal yet that the government may suspend some of the big-ticket bridges, ports and railway projects that have typified Turkey’s transformation under Erdogan. But it remains to be seen if the move, like the central bank’s greater-than-expected tightening, will be enough to mollify investors, who have helped send the lira down by 40 per cent against the dollar this year.
Financial markets have long been concerned about Erdogan’s control over monetary policy, which they say has undermined the central bank’s ability to fight inflation, now at 18 per cent. He has described himself as an “enemy of interest rates”.
“We are not considering any fresh investments right now,” Erdogan said in a speech on Friday. “There could be extraordinary and must-do investments, that’s another issue, but apart from this, we will start looking (at investments)”.
Projects that are more than 70 per cent complete will be finished, he added, but “all our ministries will be reviewing the investment stocks they have and will conduct their work by prioritising.”
In a decade and a half in power, Erdogan and his government have built bridges, power plants and hospitals and improved the lives of millions of lower-income, pious Turks. But some of his more ambitious mega-projects have drawn a backlash for their excessive cost and their impact on the environment.