'Erdoğan has surrendered Turkey to the interest rate lobby'

Photo: HDP

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After the government raised the interest rates, Turkey will make interest payments of 180 billion lira (~24.3 billion USD) from its budget this year, according to a report by the Peoples' Democratic Party (HDP).

President Recep Tayyip Erdoğan has long advocated lower interest rates against what he calls "the interest rate lobby" but the Central Bank hiked the rates in September for the first time since 2018 after the Turkish lira hit a record low against the US dollar.

With its governor replaced in early November, the Central Bank continued to raise the interest rates in the following months as it currently stands at 17 percent, up from 8.25 percent in September.

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This also marked a departure from Erdoğan's unorthodox argument of "high interest rates cause high inflation rates."

Referring to this argument, HDP Deputy Co-Chair and MP Garo Paylan said at a press conference that "Erdoğan dismissed two Central Bank governors for this reason. He instructed the reduction of the interest rates. He said, 'We'll reduce the inflation rate to single digits.' Two, three months passed and interest rates increased from 8 percent to 17 percent.

"I address Erdoğan: For years, you told this nation, 'The interest rate is the cause, the inflation rate is the result.' For years, you said, 'We are fighting the interest rate lobby,' 'We will not get our shop owners, SMEs crushed by the interest rate lobbies.' However, at this point, the interest rates doubled in three months."

Top 10 in the 'interest rate league'

Paylan went on to say that one in every five lira of tax would be transferred to the "interest rate lobby."

"Not only the interest rate burden. Our citizens, farmers, SMEs, tradespeople owe trillions of liras to banks. Banks' loan interest rates, which were 8,9 percent just five months ago, have increased to 25 percent," he added.

"In this sense, President Erdoğan has surrendered to interest rate lobbies. Erdoğan is implementing IMF policies without the IMF. The Central Bank has run out of dollars. When the money drained away, Erdoğan surrendered to the lobbies.

"Tradespeople go to loan sharks when they go bankrupt. Erdoğan also went to the loan shark in London and surrendered Turkey's resources, the budget consists of the taxes of all of us, to loan sharks.

"Currently, Germany borrows money at negative interest rates. But the Erdoğan regime transfers enormous resources from our budget to the interest rate lobby.

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"Erdoğan had set a target, he had said, 'I will make Turkey one of the top 10 economies' but he had a great failure and Turkey's economy fell back. But Erdoğan also had a 'great success' to put Turkey in the top 10 in the interest rate league.

"He made Turkey with the ninth highest interest rate in the world. Turkey is ninth in the interest rate league after Venezuela, Argentina, Yemen, Liberia, Zimbabwe, Surinam, Kongo and Iran.

"This is the point that Erdoğan, who is against interest rates, brought this country to.

"For years, Erdoğan said the interest rate is the cause and the inflation is the result. I propose a change in this concept. In Turkey, Erdoğan is the reason and the interest rate is the result." (HA/VK)