Turkish Finance Minister Resigns in Second Surprise Departure After Lira Slide

Turkish Finance Minister Berat Albayrak said on Sunday he was resigning for health reasons, the second surprise departure of a top economic policymaker in two days after the central bank chief was ousted.The upheaval follows a 30% slide in the lira to record lows this year amid the coronavirus pandemic as investors worried about falling foreign exchange reserves and the central bank’s ability to tackle double-digit inflation.Albayrak’s resignation, announced in an Instagram statement confirmed by an official, came a day after his father-in-law, President Tayyip Erdogan, replaced the central bank governor with a former minister whose policies are seen to be at odds with Albayrak.”I have decided that I cannot continue as a minister, which I have been carrying out for nearly five years, due to health problems,” the statement said. Albayrak became finance minister two years ago after serving as energy minister.A Finance Ministry official confirmed the authenticity of the statement.Albayrak, 42, was appointed energy minister in 2015 and shifted to finance after Erdogan was reelected with sweeping new executive powers in 2018.During his tenure at finance, Turkey’s economy was hit by two bad slumps, double-digit inflation and high unemployment. The lira has lost around 45% against the U.S. dollar since his appointment and is the worst performer in emerging markets this year.Erdogan, who appointed former finance minister Naci Agbal as the new central bank governor Saturday, would need to approve the resignation.The departure of Turkey’s top two economic policymakers boosted the lira, which rose 2% to 8.3600 against the U.S. dollar at 1904 GMT, and set the stage for a sharp rate rise, analysts said.Agbal “might do a better job in getting approval for a rate hike” given his experience with the government and ruling party, said Selva Demiralp, director of the Koc University-TUSIAD Economic Research Forum.”Absent a rate hike, I am afraid the financial crisis will only get worse with the depreciation in the lira that increases the external debt, triggering bankruptcies.”Analysts at Goldman Sachs and TD Bank expect a monetary tightening of at least 600 basis points from a 10.25% policy rate now.Mehmet Mus, the deputy parliamentary group chairman for the ruling AK Party, said Albayrak had taken important steps to strengthen the economy and that he hoped Erdogan would not accept the resignation.”We personally witnessed his diligent work. If our president sees fit, I hope he continues at his post,” Mus said on Twitter. 

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