Economic commentary from Prof. Dr. Duran Bülbül: 'The government will go to the IMF after the election'

Ezgi Sivritepe-12punto.com.tr

The Turkish Statistical Institute (TÜİK) announced February inflation higher than ENAG. The Central Bank of the Republic of Turkey (TCMB) revised its year-end dollar expectation in its Survey of Market Participants. The Ministry of Treasury and Finance shared the Central Government Budget Developments for February 2024. Prof. Dr. Duran Bülbül evaluated the current economic data for 12punto.com.tr.

A FIRST FROM TÜİK

The Turkish Statistical Institute (TÜİK) and ENAG recently announced their February inflation reports. According to TÜİK, February inflation was 4.53 percent, while ENAG had announced February inflation as 4.32 percent. Bülbül evaluated the fact that TÜİK announced a higher inflation figure than ENAG for the first time as follows:

"TÜİK's high announcement and ENAG's low announcement are not a criterion for borrowing. The political government will already go to the IMF's door after the election and request debt restructuring. The political government had generally resorted to borrowing from Middle Eastern countries with unknown sources and had borrowed at high interest rates. ENAG announcing inflation lower for the first time might actually be to feel the pressure on it. The real inflation in the market is above the inflation rate announced by both ENAG and TÜİK, so there is only one reason for inflation being a bit high. Since there is no wage renewal process ahead of us anymore; since civil servant, employee, and retiree wages will not be renewed, this time TÜİK turned to announcing real inflation. It is data consistent with Şimşek's statement that 'we will turn to real grounds,' and also, the Central Bank's management is in conflict with the current political government and the economic policies it announces."

"INFLATION WILL CLIMB TO 60 PERCENT"

The Central Bank of the Republic of Turkey (TCMB) announced its Survey of Market Participants. According to the survey, the year-end dollar expectation was changed to 40.53 TL. Bülbül commented on this change as follows:

"The year-end dollar they announced before was around 29. Actually, a 50 percent deviation—if there is a 50 percent deviation in inflation or exchange rates before even 3 months have passed for the political government, this shows that one might face a 100 percent deviation towards the end of 2024. In my opinion, inflation will in no way fall below 60 percent and will realistically exceed 100 percent."

WHAT WILL BE THE COURSE OF THE DOLLAR?

Bülbül also expressed his year-end dollar expectation as follows: "If they get a loan from the IMF and prepare a new stability program, they might keep the dollar in the 45-50 band. If they do not enter into a serious agreement with the IMF—and let me explain the stability program this way: the poor public or retirees will pay for it. It is done this way all over the world; the capitalist class does not pay. In such situations, a wealth transfer is usually made from the poor public to the capitalist class. IMF policies are already built on transferring wealth from the poor, workers, and laborers to the capitalist class. For this reason, I say this: if they implement IMF programs, they might keep it around 45; if there is no such agreement, the dollar will climb towards 60 TL."

THE MOST BASIC REASON FOR THE DEFICIT IS ELECTION FINANCING

The Ministry of Treasury and Finance announced the Central Government Budget Developments for February 2024. According to the announcement, the budget had a deficit of 153 billion 798 million TL. Regarding the budget deficit, Bülbül said, "This means the budget deficit will be 5 trillion by the end of this year. The fundamental problem regarding the budget deficit is this: on one hand, there is the treasury's deficit, and on the other, there is the public and budget deficit. This deficit will close in March. The reason is this: income tax will be declared in March, and corporate tax will be declared in April, and payments will begin. The budget will undergo a local adjustment, but the main source is the financing of the election. In other words, the political government is using the budget for election resources, and this is the most basic reason for the deficit."

When we conveyed Minister Şimşek's statements regarding improvements in the economy by the end of the year, Bülbül used the following expressions:

"Mehmet Şimşek's statements so far have not held up. More precisely, there are serious contradictions between Şimşek's statements and the government's practices. Şimşek said, 'we will return to real ground,' but Şimşek's stability policies and the policies he implemented have constantly been price hikes and continuous tax policies on the public, and one does not need to be a finance minister for this. Şimşek has not put forward anything new. Therefore, if Şimşek had implemented a policy he believed in, the budget would not have risen from 5.5 trillion to 11 trillion. This means they will follow an expansionary fiscal policy and an inflationary economic policy. An indicator of this is approximately this: in just the last two months, the Central Bank printed 24 billion TL. Şimşek printed 24 billion TL of unbacked money despite a tight monetary policy. The political government's tight monetary policy is built only on the poor and retirees, and the fundamental problem here is this: approximately 90 percent of the national income is taken by the 10 percent segment in this country; the 90 percent segment shares the 10 percent."

"THE GOVERNMENT OF CAPITAL"

Bülbül responded as follows to our question regarding the allegations about the meeting where Minister of Treasury and Finance Mehmet Şimşek came together with the heads of chambers and stock exchanges:

"They have put an interest expense ratio of approximately 2.4 trillion into the budget. There is a serious deviation here as well. When we look at it in terms of the high-interest policy ahead, the burden it will bring to the budget is approximately 2.4 trillion; that is, we will face interest expenditures close to 5 trillion. In other words, there will be serious borrowing. They will try to cover this with taxes and price increases. By the end of 2024, if we base it on today's prices, prices will increase by approximately 100 percent, which means the public will become 100 percent poorer.

The President of the Union of Chambers and Commodity Exchanges and the government's Minister of Finance, the citizens representing the union of exchanges, are arm in arm. They are worried about how we can exploit the poor and how we can transfer it here. There is no credibility in what they said there. There isn't, because in a place where inflation is over 150 percent, if you have a Central Bank monetary policy interest rate of 45 percent, you are selling money to these rich people in the market. They are already making 100 percent profit. The same poor segment cannot get housing and vehicle loans. For this reason, the government is the government of capital."

News Source: Ezgi Sivritepe