Our country is going to a bipolar election next Sunday. Since the main problem of the nation before the election is the economy and livelihood, an important part of the election promises of the candidates and parties is aimed at increasing the economy and welfare. In today's article, we will try to answer the question of what is the general situation of the economy as the country goes to a critical election.
As we have stated many times before, the economic policy put forward by the import minister Kemal Derviş after 2001 and which was based on the understanding of "low exchange rate high interest" was implemented by the AKP government for years without touching it point by point.
As a result of the wrong economic policies implemented at that time, combined with global economic developments and the impact of unqualified economic staff, our country was faced with an economic crisis that gradually increased its impact especially after 2019. As a result of this crisis period, the country's economy has become a very troubled image in terms of all economic indicators.
First of all, the issue that needs to be expressed is that the poor budget management performance, which was the main cause of the merit crisis in economic management and governance, has peaked this year.
The central government budget, which gave a deficit of 139 billion TL in 2022, has given a deficit of 250 billion TL in the first 3 months of 2023. Considering the expenditures to be made with the effect of the earthquake, the cost of the currency-protected deposit system, the expenditures made within the framework of the election economy, and the promises made in abundance, it will not be a surprise that the budget deficit exceeds the deficit figure of last year by 10 times.
This situation is not sustainable and it will become more and more difficult for the state to fulfill its economic function. On the other hand, the central government gross debt stock, which is one of the economically important indicators, reached the level of 4.487 billion TL as of 31 March 2023. If we state that this figure was around 240 million TL when the current government took over the administration in 2002, it will be seen more clearly how terrible the point reached is.
Since one of the most important indicators of the crisis in the eyes of the citizens in terms of economy is the increase in exchange rates, the government tries every way to curb the increase in exchange rates as a result of bad economic conditions and to suppress the exchange rates.
The irrational steps taken to suppress the exchange rates have caused serious differences between the Central Bank rates and the free market rates, which indicates a great danger that will result in the exploitation of the society.
However, the amount of foreign debt with less than a year to maturity is 196 billion dollars, Turkey has become a country that imports even the most basic necessities, the annual current account deficit has reached the level of 55.4 billion dollars, breaking the record of the last 10 years. Considering this, it will not be difficult to predict that the need for foreign currency will increase much more.
The increase in the need for foreign exchange may cause a serious explosion in exchange rates, which are suppressed artificially and irrationally. A possible increase in exchange rates may cause inflation, which has been partially decreasing due to the base effect, to show an increasing trend again in Turkey, which has become an import country.
Despite the base effect, inflation, which was announced as 43.68% by TURKSTAT and as 105.19% by ENAG, will show an upward trend again, which will reveal the risk of lowering the already very low purchasing power and living standard of the citizens.
We can describe the current table with other data longer. However, when the incompetence in the management is added to the data we have mentioned above, it will not be difficult to understand the current economic situation. I am aware that I paint a dark picture from the beginning of the article. Unfortunately, this is the current situation and the problems cannot be solved without a good understanding of the current situation. Despite this dark picture, can Türkiye be brought up economically?
Of course, Turkey, which we define as the country of potentials at every opportunity, can be revived with the right management, provided that the economic, financial and political understanding integrated into the global system changes. However, this situation cannot be corrected by policies that are not based on the potential of this country, with support or financing from outside, and in line with the global economic-financial understanding, but on the contrary, it will get worse.
So, does current political arithmetic offer hope for economic recovery? Given the economic promises, policies and understanding, hope seems to be behind the iceberg. I hope we are wrong. I hope that the elections will lead to beneficial results for our country and the Islamic world.