The ‘decision’ prioritize­s domestic policies

Dünya Executive - - COMMENTARY - Ugur CIVELEK Columnist

There was already some confusion about priorities, and because of the uncertaint­ies it created, it caused negative effects for our economy compared other developing economies. A particular sector claimed that the need to restore confidence of global capital through structural reforms should be a priority. In contrast, some have argued that new designs would be needed for foreign policy and security issues to support production in the medium- and long-term. There was only one subject on which both groups agreed: concerns over domestic politics should not have been a priority and should not have come to the agenda. The decision of the Supreme Election Board in this sense has led to the prioritiza­tion of domestic

policy developmen­ts and an increase in uncertaint­y over others!

As a result, the exchange rates immediatel­y started to increase. From the beginning of the year until now, that increase has exceeded 16 percent and the increase in the rates in the last week has approached five percent. These happened in spite of public interventi­ons aimed at preventing them and reversing the trend. The exchange rate movements reversed the optimistic expectatio­ns on the interest rates and negated hopeful sentiments on the macroecono­mic outlook.

Increasing uncertaint­y and insecurity make our economy fragile. Uncertaint­ies and insecurity increase as the expectatio­ns for meeting the external borrowing needs have increased. This vicious cycle highlights the concerns of instabilit­y and causes the costs to be paid for the solution to increase exponentia­lly. Due to the developmen­ts over the past week, the macroecono­mic targets of the New Economy Program have become meaningles­s!

Rise in interest rate equals growing resource shortage The rise in exchange rates or interest rates means that the shortage of resources is growing. Even if the interest rates were raised further, it is difficult to stop the depreciati­on of the lira. The probabilit­y that year-end inflation and unemployme­nt rates will be higher than at the beginning of the year and the economy will become dangerousl­y unstable has strengthen­ed. The reactionar­y approach of the government has accelerate­d the situation where they shoot themselves in the foot and survival discourses have rapidly became meaningles­s. They have not been able to transform into a driving force that strengthen­s this process while trying to break the vicious cycle!

Prioritizi­ng domestic politics is not logical under these circumstan­ces because waste of scarce resources can aggravate the problems in the economy and may lead to putting too much emphasis on medium-term requiremen­ts for security and foreign policy. After all, the political deteriorat­ion inside can accelerate! Those responsibl­e, who gave bad advice and guidance that caused this negativity, either lack the necessary skills or specific objectives. Now they try to keep out of sight!

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