Page 12 - TURKRptFeb22

calm after the USD/TRY rate stabilised below the 14-level. The current account deficit is watched.
It was early in November 2020 when it dawned on the government that it did not have the firepower to continue defending the lira. A sharp U-turn that brought in a new central bank governor triggered hot money inflows from abroad. On March 19, 2021, the governor was fired.
Since a new rate-cutting cycle was launched on September 23, the reserves and firepower to defend the lira are in the spotlight again. However, everyone is so bored of this repeating movie. Those who do not have to do lira business just ignore Turkey, its currency and papers.
● Eurobond auctions: In January or February at the latest, the Turkish Treasury rides the new year rally and takes its slice from fresh portfolio allocations for the new year by selling eurobonds.
● NPLs, bailouts and debt restructuring queues build up.
● Snap polls: How the Erdogan regime will end is under discussion.
● The ultimate end: Turkey still has access to borrowing on the markets—though each instance of borrowing at high costs brings the country closer to the ultimate end, namely an economic and political surrender to an IMF programme.
A new version of the ruling AKP, working under an IMF programme, is the likeliest potential major change you might see on the road ahead.
On January 19, main opposition party CHP chair Kemal Kilicdaroglu told the EU ambassadors during a private dinner that Ali Babacan’s Deva Party is working on an economic programme for the opposition alliance. Babacan was the minister of economy (2002-2007), chief negotiator for Turkish accession to the EU (2005-2009), foreign minister (2007-2009) and deputy PM responsible for the economy (2009-2015) in the team that implemented the 2001 IMF programme.
Istanbul Mayor Ekrem Imamoglu could be a good candidate to conduct public relations activities for the IMF programme as the president or the PM (if the system is changed back to a parliamentary regime). He is flexible and populist. He appeared at Chatham House. He sold eurobonds (Istanbullers are paying good coupons). On January 24, he was caught with the British ambassador in a fish restaurant.
The new AKP is in the making.
12 TURKEY Country Report February 2022 www.intellinews.com