Turkish President Tayyip Erdogan aims to streamline his economic team after he resumes leadership of the ruling Justice and Development Party (AKP) on Sunday in an effort to speed up decisions and reassure markets that ministers are working to the same plan, sources said.
Erdogan is returning to leadership of the party after last month’s referendum lifted a barrier to the president belonging to a political party. The referendum also granted him sweeping powers, which the government said would allow it to accelerate lawmaking and roll out long-awaited tax and investment reforms.
Once regarded as one of the world’s most promising emerging markets, Turkey has been hit by a sell-off of the lira on concerns about the erosion of institutions and the slow implementation of promised change.
A senior AKP official said a cabinet reshuffle, particularly of economic portfolios, was likely.
Currently Deputy Prime Minister Mehmet Simsek, who is viewed favourably by investors, oversees the Treasury, while another deputy prime minister, Nurettin Canikli, is in charge of banks.
Economy Minister Nihat Zeybekci oversees foreign trade, while Finance Minister Naci Agbal, Customs Minister Bulent Tufenkci and Development Minister Lutfi Elvan all hold economy-related positions.
“The current economy management seems to be made up of different voices, preventing harmony and sending out clear messages,” the official said. “The cabinet revision may bring a positive perception in markets.”
Officials say Erdogan will chair meetings to assess and coordinate economic policy and implementation.
“Bringing management of the economy back under one hand is being evaluated, but the last word belongs to President Erdogan and Prime Minister (Binali) Yildirim,” the official said.
Until two years ago, there was a single deputy prime minister overseeing the economy.
Investors remain sceptical, however, citing concerns that the government is emphasising growth driven by domestic demand over tackling inflation, which hit an 8-1/2 year high of 11.87 percent this year.
“The fiscal policy stance certainly doesn’t indicate that a massive love for reform has been discovered at this stage,” said Manik Narain, a strategist at UBS in London.
Reining in inflation is critical to weaning the economy off its dependence on foreign funding and improving the savings rate, Narain said.
The AKP official said authorities had been slow to act in some areas.
“The government took some proactive steps in the right direction on some issues such as the credit guarantee funds, but some decisions take a long time, like those by the food committee. The economy has no time to lose due to these reasons,” said the same official.
The food committee was formed to fight food price inflation, which has stubbornly driven Turkey’s consumer prices higher.
Ruling party officials say the anticipated ministerial changes will be made in part with an eye on presidential and parliamentary elections due in 2019.
“Although we have achieved the desired outcome in the referendum, a significant part of the population voted against it. We received the message, we need to find a solution to the organisation and the cabinet’s exhaustion,” a source close to Erdogan said.
Erdogan helped to found the Islamist-rooted AK Party and served as its leader during his long stint as prime minister from 2003 until 2014, when he became president. The April 16 referendum backed his push for constitutional reforms centred on a strong executive presidency.