Former Turkish Finance Minister and Erdogan’s son-in-law Berat Albayrak broke the silence months after his sudden resignation, threatening to take legal action against his critics, who claim his policies cost the country more than $ 100 billion in reserves. .
“There is no possibility that the foreign exchange or Turkish lira reserves have disappeared, evaporated or been transferred to a different location,” Albayrak’s lawyer said in a statement on Saturday.
Albayrak’s lawyer also said that the slanderers of the Turkish President’s son-in-law would be sued and compensation of 500,000 pounds (approximately 58,500 euros) would be demanded, which would be given to the families of soldiers who lost their lives.
Support from Erdogan
Earlier in the day, Recep Tayyip Erdogan rushed to defend his son-in-law, saying his title as the president’s son-in-law “overshadowed his experience, efforts and success”, while denying that the country’s reserves had been mismanaged.
Turkey “traded in a foreign currency in a controlled and planned manner”, in a bid to avoid disrupting reserves, the Turkish president said. “There are no foreign currencies that have evaporated, nor transactions that are illegal or immoral.”
When Albayrak took office as Tsar of the Economy in July 2018, Turkey began spending from its foreign exchange reserves to support the pound in times of instability. Goldman Sachs estimates it spent more than $ 100 billion last year alone.
Pound drop by 40%
The pace at which Turkey’s foreign exchange reserves have shrunk has left the country’s economy more vulnerable to external shocks while failing to stabilize the pound, which fell to a record low shortly before Albayrak left. During the latter’s term, the Turkish currency fell by at least 40% in total, showing the worst performance among its currencies, according to Bloomberg.
In recent months, Turkish opposition parties under the CHP have raised their voices in criticism of both Albayrak’s policies and his “disappearance” following his unexpected resignation in November.
“The $ 128 billion of the central bank has disappeared and the ‘groom’ is largely responsible,” the CHP tweeted at the weekend.
Erdogan confusion about reserves
Ibrahim Turhan, a former official of the ruling AKP party who joined the opposition Future Party (Gelecek Partisi, GP) (he has served as deputy governor of the Central Bank and chairman of the Istanbul Stock Exchange). used wisely.
“If you spend your reserves to hold the exchange rate, but it goes up from 5 to 8.5, then your reserves have evaporated,” Turhan wrote on Twitter, referring to the pound-dollar exchange rate.
Albayrak’s departure three months ago was part of a broader restructuring of Turkey’s economic policy. Officials familiar with the matter told Bloomberg that the changes were triggered by Erdogan himself’s confusion about how the country’s reserves had been used.
Expectations for “orthodox” monetary policy
According to them, the policy on reserves was implemented by the country’s Central Bank with strong support from the Albayrak ministry, as it tried in vain to stabilize markets without raising interest rates – combined with Erdogan’s “hatred” of high interest rates.
Albayrak found support in his successor, Lutfi Elvan, who said foreign currency trading was “aimed at economic stability” amid “unusual fluctuations in international markets”.
Since Najib Agbal was appointed governor of the Central Bank and Elvan has been appointed finance minister, Turkey has seen significant interest rate hikes. These moves have pushed the pound up by at least 20% as expectations rise that Turkey will return to a more orthodox monetary policy.
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