Page 30 - BNE_magazine_06_2019

30 I Cover story bne June 2019
Turkish meltdown II
Akin Nazli in Belgrade
By now there’s an unmistakable foreboding on the markets that Turkey is heading towards another crisis.
The country has only just started to recover from last year’s debilitating currency meltdown, but instead of belt tightening and hold a steady course,
the market has been spooked by the non- traditional Erdoganomics policies and investors are openly speaking about the possibility of a default.
As the government rolls out yet another pre-poll stimulus – this time as the ruling AKP moves to delete the humiliating loss it suffered in the Istanbul election in
a poll re-run scheduled for June 23 –
it has to come to terms with how it has killed off international and domestic financing. There is a growing sense
of dread and calls for an IMF rescue have grown louder and louder, but will almost certainly be ignored.
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Foreign investors were wounded by Ankara during the run-up to the end-of- March local elections. In a frantic efforts to defend the Turkish lira (TRY) before polling day Turkish officials simply shut down the lira swap market in London, leaving traders up the proverbial creek without a paddle. It was yet another example of the state blatantly interfering with the market for political ends
and follows on from last November’s
channels to finance the state budget reportedly last week gave up on a plan to tap the central bank’s legal reserves after just the rumours pushed the value of the lira down sharply. That was followed by claims the central bank has been fudging the true amount of reserves it holds, massively overstating the amount. At the same time Bloomberg was reporting that the government was “kindly requesting” that local private lenders
“Turkey never had much chance of avoiding a lira collapse given its years-long credit-fuelled boom”
government shenanigans on the domestic bond market. Market participants are getting seriously spooked.
Officials looking for unorthodox
buy government bonds at domestic debt auctions for less than market prices.
In other news with added-jitter- potential, revenue-starved officials