The savior will again be a free economy

Two years ago, while closely following these processes for ASTNA, we wrote that Turkey no longer cares about international credit rating agencies.

However, businessmen, both at home and abroad, have repeatedly warned the government over the past five years that instead of sharply criticizing international credit rating agencies for reporting on the state of the economy and accusing them of "being biased and jealous of Turkey", it should take necessary measures after objective analysis of the reports. Business people, for example, explained to the government in a very simple language the truth that everyone in the world knows: when we knock on the door of any bank, they look at the reports of institutions such as Fitch or Moody's on our country, evaluate, grant or reject our credit requests.

The government's protests have only a negative effect on our borrowing. However, especially in the last 25 months, it could not be possible to have anyone accepted this fact.

Of course, the disregard did not cause the credit rating agencies to change their reports. As Mirza Alakbar Sabir said: “Çax çax  başın ağrıtdı, kefin çəkdi dəyirman.” (the meaning of poem verse is “the dogs bark but the caravan goes on”)

And in a report released by Moody's four days ago, the country's creditworthiness was downgraded from B1 to B2. Experts who follow the case closely point out two points, the first of which is that there is no score lower than B2, and the second is that for the first time since 2001, Turkey's access to credit is so weak.

President Erdoğan responded to the reduction of the country's creditworthiness with the words - “Currently, the Turkish economy is at its peak. Not on the bottom, but on the ceiling. They also undermine our trust again.”

Undoubtedly, as the leader of a party that has ruled Turkey for 18 years and a full-fledged head of the state for the last two years, if Erdoğan not only criticizes Moody's report but completely rejects it, it means that he believes that the measures taken are correct and that there are no problems in the development of the economy.

It is up to the opposition parties and the independent media to decide whether or not to justify his assessment.

They also know for themselves whether the credit rating agencies will trust President Erdoğan’s "peak" statement, as he said before. As everywhere where free market rules are enforced, the Turkish electorate will either support or punish the government in the near or far election, depending on the situation in their pockets. These are known. The unknown side of the matter is that the government has insisted on the economic policy pursued over the past two years, despite so much criticism from inside and outside.

Because, first of all, the government's policy in Syria has had a negative impact on the economy in several ways. If $ 50 billion had not been spent on refugees, Turkey's creditworthiness would not have been reduced to B2 today, and the Central Bank's foreign exchange reserves would not have been halved.

With the almost complete abolition of the Central Bank's independence, the transfer of loans to consumption rather than production, and, in particular, the mobilization of all banks to support housing sales to revive the construction sector, according to Reuters, "the ruling party has laid the groundwork for a process that has led to a loss of its`support." At this stage, no action is taken on the simplest reality that everyone has seen for years.

Since the early 1990s, international financial institutions have agreed to reduce government spending as a precondition for lending to Turkey. By accepting that condition, the AKP tried to minimize state spending in the first and second periods of its rule.

After 2011, even proceeds from the sale of state-owned facilities were spent on daily expenditures by not holding in leash. And the point has already been reached that the state is looking for the money by not limiting its spending but increasing it.

Whether that money is found or not, the government will implement a classic formula for Turkey: if money is found, it will be spent on the daily expenses of the state, and if it is not found, the burden will remain on the private sector.

The private sector, on the other hand, is forced to lean over backwards.

This was the case until 18 years ago, and the AKP was able to come to power on its own, promising to change it. After 18 years, the private sector again, the private sector all over again.

Turkey's strength lies in this "private sector" phenomenon. As politicians bring down, the private sector can pull the country out of that quagmire, albeit temporarily, at the cost of making great or desperate efforts. As the AKP is convinced of this, President Erdoğan is responding with a "peak" counter-attack to the almost bankruptcy report of the Moody's.

Mayis Alizade