The ‘decision’ prioritizes domestic policies
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!