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Fitch says Erdoğan’s remarks on tightening control of central bank raise risks

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International credit rating agency Fitch on Tuesday published a press release on Turkey, arguing that President Recep Tayyip Erdoğan’s remarks last week on Bloomberg TV, which implied more political control over the central bank, “raise the possibility that discretionary policymaking and policy predictability will come under pressure after June’s elections.”

“This would be likely to come at a time when tougher global financing conditions will test the vulnerability created by Turkey’s large external financing requirement,” Fitch said on Tuesday.

According to the rating agency, the Turkish lira has been losing value against foreign currencies due to a widening current account deficit, double digit inflation and political and geopolitical developments.

As Turkey heads to presidential and parliamentary elections on June 24, the Turkish lira’s record low valuation against the US dollar has raised serious concerns. One US dollar was valued 4.57 Turkish lira early in the morning but climbed to 4.66 during the day.

“Of course our central bank is independent. But the central bank can’t take this independence and set aside the signals given by the president, who’s the head of the executive,” President Erdoğan said on Bloomberg TV on May 15.

In another article published today on the Bloomberg website, Erdoğan’s insistence on low interest rates was harshly criticized.

“Turkey is paying more than Senegal on its debt, even though it has a higher credit rating and its economy is 60 times bigger. Why? Analysts say it’s Erdoganomics,” the Bloomberg contributor said.

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