Page 36 - TURKRptJun21

The Erdogan family’s distance from the economics literature coupled with the courage of ignorance is also producing trouble here for the Turkish economy.
In the fall of 2018, following the August lira crunch and the subsequent rate hike, the finance ministry led by then minister Berat Albayrak, President Recep Tayyip Erdogan’s son-in-law, came up with the idea of replacing long-term lira-denominated domestic bond auctions with FX-denominated domestic bond auctions.
The reason was so logical it reached a height that would make Aristotle, the father of plain logic, plain jealous.
Lira interest rates were high and FX-denominated paper would also help absorb demand from Turks for FX-denominated investment.
Consequently, the maturity structure of the Treasury’s domestic bond redemptions deteriorated and the central government’s FX-denominated debt stock reached 57% of an overall Turkish lira (TRY) 1,950bn ($235bn).
Lately, the Treasury held switch auctions to lengthen the maturity of its
36 TURKEY Country Report June 2021 www.intellinews.com