Can Turkey’s new economic plan restore foreign investor confidence?(Al Monitor, Sept 9,2023)

Turkey’s government has unveiled a new economic program to bring inflation down to single digits by 2026, but questions linger on whether it can attract much-needed foreign investments.

The so-called Medium-Term Program, which covers the next three years, is Ankara’s first comprehensive economic plan since a new economic leadership took office in June and pledged to return Turkey to “rational ground” in economic management.

Following his reelection in late May, President Recep Tayyip Erdogan appointed a new economy boss — Treasury and Finance Minister Mehmet Simsek — and replaced the central bank’s governor and senior managers, signaling a turnaround from his unorthodox policies that were largely blamed for rampant inflation. February’s devastating earthquakes in southern Turkey have further deepened the country’s financial woes.

Since similar programs have failed to meet their objectives in the past five years, the new targets are being closely analyzed by pundits. Presenting the plan on Wednesday, Vice President Cevdet Yilmaz said the main objectives are to recover from the earthquakes, achieve macroeconomic and financial stability, reduce inflation to single digits and maintain growth and employment.

Rebuilding the 650,000 homes and business places destroyed by the quakes is a massive task down the road. The cost of reconstruction alone is estimated to start at $100 billion, with further investments required to minimize the damage of a big tremor that scientists expect to hit Istanbul, Turkey’s most populous city and economic hub, in the near future. Quake-related spending was the main reason for the 1.1 trillion lira ($41 billion) supplementary budget that Ankara sought in July, and such financing needs will continue in the coming years.