Turkey to freeze new gov­ern­ment projects: Er­do­gan

The Gulf Today - Business - - FRONT PAGE -

ISTANBUL: Turkey is freez­ing new gov­ern­ment in­vest­ment projects, Pres­i­dent Tayyip Er­do­gan said on Fri­day, to rein in spend­ing and stem dou­ble-digit in­fla­tion af­ter a 15-year 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 per­cent 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 per­cent. 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.

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