Mehmet Şimşek, who has served in senior positions such as the Minister of Finance and Deputy Prime Minister in AKP governments for many years, recently returned to the cabinet, from which he was excluded in July 2018 for advocating interest rate hikes. After taking up the post a second time, at the ‘persistence’ of President Recep Tayyip Erdogan, with whom he had a discussion at that time. Credible veteran Ankara affairs correspondent Erdal Saglam claims Simsek said that he was very surprised that no flexibility existed at all in budget expenditures.
10News news site columnist and Ankara reporter Erdal Saglam shared his backstage information in his article titled “High budget deficits became Simsek’s nightmare”.
Reminding that Hafize Gaye Erkan, who was appointed with Simsek’s suggestion to the Presidency of the Central Bank of the Republic of Turkey (CBRT), is almost certain to launch a high rate increase, Saglam said, “However, no matter how high the increase is, if Şimşek cannot sort out the budget deficits, it is also obvious that it will be difficult to ensure the flow of foreign funds, which are connected budget austerity”.
In his article, Saglam stated:
‘HE WAS SURPRISED’
“Mehmet Şimşek told his acquaintances that he was looking at the budget savings possibilities and realized that he could only work on 9 percent of the budget expenditures in order to save money. It is stated that Şimşek is very surprised that there is no flexibility in budget expenditures and the remaining expenditures have become frozen.
The budget has last seen such a dire state of “frozen expenditures” in 2000 which forced the then-premier Ecevit to call in the IMF. Election spending with the addition of factors such as earthquake recovery, early retirement and the interest cost of FX protected deposit scheme will add significantly to the recent increases in borrowing, adding more costs to be covered down the line.
Şimşek reportedly says they can only work on 9 percent of the budget expenditures to find savings, but it is unlikely that the savings to be made will exceed 2-3 percent of the total budget. While it was learned that this situation was discussed at the Economic Coordination Board held last week, it is stated that studies have started on what can be done within the scope of preparations for the medium-term program.
Source: Mehmet Şimşek’in yakınlarına söyledikleri ortaya çıktı: ‘Yüksek Bütçe açıkları kâbusu oldu’
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