Loans compensate for economic crises in Turkey … Where does Erdogan...

The Saudi Press Agency, Bloomberg, warned today, Monday, of the negative consequences of the Turkish regime’s excessive granting of internal loans to Turks, in light of the pound’s decline to its lowest levels in its history.

The US agency said that excessive lending as a weak sterling pound weakened commodity prices to higher levels, prompting expectations that Turkey’s central bank will have to maintain strong restrictions on lending after the sudden rise in interest rates.

The inflation rate in Turkey has increased dramatically due to the loan “madness” and the rise in commodity prices in light of the pound’s decline to its lowest level in its history.

The agency said that inflation was rising due to a wave of loans to consumers in the third quarter, when households used interest rates after rising inflation to borrow at the fastest rate in more than a decade.

While the government later withdrew from the stimulus program, the pound fell to its lowest levels and commodity inflation remained elevated.

“Food and transportation costs caused prices to rise in particular,” said Khan Ayan, an economist at Active Bank in Istanbul.

“Although we are witnessing a gradual slowdown in the coming months, the cost of central bank financing will remain high for some time,” added Ian, who expected inflation to rise to 12.6%.

External loan

The Turkish regime has often resorted to external lending to support the economy and cover the budget deficit, which exacerbated the Turkish crises.

Earlier, Turkish financial figures revealed that the Ankara government borrowed about 119.9 billion Turkish liras (17.63 billion dollars) in the first four months of the year, to cover its budget deficit.

Turkey’s total external debt, which was owed by it within a year, increased at the end of May, amid a sharp decline in the country’s foreign exchange reserves and a deteriorating pound.

The Turkish Central Bank said earlier, that Turkey’s external debt due within a year or less amounted to $ 169.5 billion at the end of May, an increase of about $ 5 billion from the previous month.

Weak pound

On September 24, the central bank surprisingly raised the record, the first increase since the currency crash in 2018. On Friday, the average cash cost provided by the Monetary Authority to commercial lenders was 11.32%, compared to 7.34% less than three months ago.

However, many economists believe the policy remains too loose, with interest rates remaining negative in line with inflation.

Turkish Finance Minister and Turkish Minister Brett Albirak said last week that the government expects inflation to slow to 10.5% by the end of the year and 8% by the end of 2021.

The policies of Turkish President Recep Tayyip Erdogan and his insistence on supporting terrorism and interfering in the affairs of the countries of the region have exacerbated the economic crisis in Turkey.

The country’s foreign currency reserves at the Turkish Central Bank have fallen to less than $ 50 billion, after losing $ 1.7 billion.