NEWS NATIONAL NEWS        04/06/2023

New Economy Minister Mehmet Şimşek is Turkey’s best hope for economic recovery

Turkish President Recep Tayyip Erdoğan has signalled a shift toward more conventional economic policies, as finance veteran Mehmet Simşek, who enjoys international credibility, is set to return at the helm of Turkey’s embattled economy. 

 

Turkey’s newly inaugurated President Erdoğan has unveiled his 18 member Cabinet on Saturday, naming Simsek, former finance minister and deputy premier, as his new treasury and finance minister. The move signals a major U-turn on the part of Erdoğan, whose long-held unconventional economic view is based on the belief that higher interest rates cause higher inflation. Şimşek, who is known as a champion of economic orthodoxy, will nevertheless face an uphill battle to salvage the country’s beleaguered economy even under conventional economic policies. Şimşek replaces Nurreddin Nebati who was appointed Minister for the Treasury and Finance on 02.12.2021.

 

After assuming sweeping powers under his executive presidential system, Erdogan made a fresh push to put his unorthodox economic policy into action. Conflicts stemming from the implementation of his controversial policy led to the finance minister being changed four times and the central bank governor three times within a span of five years. Under pressure from Erdoğan, the Turkish Central Bank cut interest rates from 19% to 14% between September and November 2021 resulting in a collapse in the Turkish lira, which was only stabilised with the introduction of the F/X protected Turkish lira deposit instrument. The Central Bank resumed its cutting of the interest rate from 14% to 9% between August and November 2022, and then to 8.5% in February 2023.  

 

Critics say the Central Bank’s independence largely eroded under Erdoğan’s executive presidency system, accusing the government of depleting the Bank’s forex reserves by channelling hard currency to the market in a bid to prop-up the Turkish lira in the face of lower interest rates. 

 

Şimşek's return to the government’s economic team will send a message of stability to the markets, signalling the end of Turkey's erratic monetary policy over the past years. 

 

In contrast with the current landscape, Şimşek’s tenure as finance minister between 2009-2015 and as deputy prime minister responsible for the economy from 2015-2018 was marked by relative stability. Şimşek had stressed the importance of the independence of the central bank as an economic player during his years in office.

 

Soft-spoken Şimşek, 56, who enjoys international and domestic credibility, built himself a reputation among domestic and international finance corners as an honest and rational politician. Before his debut in politics under Erdoğan’s ruling Justice and Development Party (AKP), British-educated Şimşek was the head of Fixed Income Strategy and Macro Economic Research for the Europe, Middle East and Africa region at Merrill Lynch in London. His career in finance kicked off as a Wall Street strategist. 

 

Şimşek did not assume any position under Erdoğan’s government formed in late 2018 under the presidential system, which gave Erdogan sweeping authority. His deputy premiership saw internal discord within the government over Erdoğan’s unconventional views, prompting him to attempt to resign in early 2018. His resignation was reportedly fended off by the mediation of then-Prime Minister Binali Yıldırım. 

 

The rift between Erdoğan and Şimşek became glaring after the economy czar had left the government and active politics. In a 2019 address, Erdoğan publicly accused Şimşek of being involved in the swindling of state bank Halkbank.

 

It remains to be seen how Şimşek and Erdoğan will reconcile their structural differences over monetary policies, but the incoming treasury and finance minister reportedly asked for autonomy in the management of the economy in a series of meetings he held with Erdoğan before and after the elections. 

 

Şimşek faces an uphill battle to combat inflation, curb soaring prices and win foreign investors’ confidence. The Central Bank's net foreign reserves have fallen below zero for the first time since 2002, according to official data released in late May. Coming atop breakneck inflation and an acute cost of living crisis, Turkey’s risk premium has also shot up, exceeding 600 basis points.

 

The February 6th earthquakes in the south of Turkey which killed more than 50,000 people have put an additional strain on the country’s financial resources, as has the spending spree Erdoğan embarked on ahead of the May 14th general elections by announcing a series of wage hikes and incentives.

 

A bipgraphy of Mehmet Şimşek is given on http://www.mehmetsimsek.org/en-us/detailed-bio  as follows :

 

“From poverty to politics, Finance Minister Mehmet Simsek is living proof that anything is possible in life.

A beginning in struggle, Mehmet Simsek was born in 1967 in a small village in Batman province, one of the poorest regions in Turkey.

The youngest of nine children, he grew up with the challenges of limited resources; no running water, no electricity and no local school.

Yet, with seemingly impossible hurdles to overcome, Mehmet Simsek persevered.

A combination of diligence, hard work and dedication to the pursuit of excellence proved an effective mix and set the foundation that would  lead him to many successes throughout his professional career. It is no surprise Mehmet

Simsek has risen to the top and is now Minister  of Finance of the Republic of Turkey.
His own words say it best:  “I am the best evidence that equal opportunities prevail in this country. I managed to explore and create a new world out of nothing.”

This is his story.

 

Education, The Key to Opening Doors

With no school in his village, Mehmet Şimşek attended primary and secondary school in Batman. From the start he excelled as a student and ranked second place in his graduating class. He then continued on to higher education and won a place in the Faculty of Political Science at Ankara University. Upon graduation he continued on as a Research Assistant until he was awarded a state scholarship to study abroad.

Taking the opportunity to further his education, Şimşek accepted a place at the University of Exeter in England. There, he completed his masters degree, an MPhil in Finance and Investments.

 

Professional Career

Upon completing his Master’s in England, Simsek returned to Turkey and began his professional career. He spent four years working for the US Embassy as a Senior Economist (1993-1997). From there, he moved to the private sector and worked on Wall Street in New York for UBS (1997) before returning to Turkey to work as an Economist for Deutsche-Bender Securities in Istanbul (1998-2000). It was there that Şimşek began to establish himself as an authority on the Turkish economy and became a sought after resource by several London based investment banks.

 

London Calling

It was only a matter of time before the opportunity to move to London arose. In 2000, Simsek entertained several offers, ultimately choosing Merrill Lynch. Hired as an Economist and Strategist responsible for emerging Europe, Middle East and Africa (EMEA), Simsek soon started making his mark in the industry. Proving himself through the same diligence, hard work and dedication honed as a student, he found himself working his way up at Merrill Lynch and was appointed in 2006 as Head of Fixed Income Strategy and Macro Economic Research for the emerging EMEA region.Throughout his career at Merrill Lynch, Şimşek became known for his impartiality, integrity, and the ability to ‘tell it like it is’ to the client. A combination of these traits, and his establishment already as an authority on Turkish economic issues, led to a rising global recognition in the industry. From this position in the financial industry, he would start to make inroads back to Turkey and attract the attention of the Turkish government. 

 

The Road Home

In Spring 2006 Şimşek was nominated as a candidate for the Turkish Central Bank Governor. He was excited at the prospect to return to Turkey and to have the opportunity to contribute to the development of his own country. Unfortunately, the appointment was not approved. Disappointed yet undeterred, Simsek continued to make connections that would eventually lead him home. A few months later, Simsek gained a private meeting with Prime Minister Erdoğan. That meeting proved the catalyst to the birth of his political career. In his straight forward approach, Şimşek explained the importance of emphasizing structural reforms in political policy, and the effect these reforms would have on the Turkish economy. Prime Minister Erdogan was impressed and extended Şimşek an open invitation stating: “We need you in the kitchen.” Şimşek was honoured by the invitation. Although never thinking of himself as a politician, he certainly was driven by the chance to serve his country. Early elections in 2007 provided an opportunity. In literally the space of a weekend, Şimşek received sabbatical leave from Merrill Lynch and found himself back in Turkey. Nominated to Gaziantep Province as his constituency, he was soon on the campaign trail sharing his agenda of structural reform and the way forward for Turkey. All the years in the private sector and his ‘tell it like it is’ approach paid off. With a resounding landslide victory, Şimşek was on his way to serving his country and truly making a difference. Soon after being sworn in as a Member of Parliament, Şimşek was named State Minister of the Economy. He was suddenly in a position to push forward an agenda of structural reform and take the Turkish economy to a stronger, more stable position. Serving in this position for two years, Şimşek was then appointed Minster of Finance in 2009. As Minister of Finance, Mehmet Şimşek was in charge of developing and maintaining the budget of the sixth largest economy in Europe, and the 16th largest in the world.

 

Walking the Walk

Throughout his two terms, Minister Şimşek has undertaken far reaching structural reforms that have carried Turkey forward into the league of more advanced global economies. He has also worked diligently to establish the Tax Audit Board, simplify tax regulations and enhance taxpayer’s rights. Direct in his approach, his honesty and integrity play a large role in reducing the shadow economy. This same approach is taking Turkey forward as a first class nation.

Always the realist, Minister Şimşek is not one to rest on his laurels. He knows there is still much work to be done. His agenda remains the same, as he continues to dedicate himself to the improvement of Turkey.”



Turkey’s net minimum wage has been raised 49% to TL 17,002 (USD 577) as of 01.01.2024       Migration communication helpline 157 available for foreigners in Turkey       Read our homepage articles on developments in the Turkish economy       Turkey’s official annual inflation rate increases marginally to 64.86% in January 2024       Turkey’s official unemployment rate is 8.8% in December 2023       Read our BUSINESS section for latest sectoral and corporate news       Turkey’s population is 85,372,377 as of 2023 yearend       No. of foreigners visiting Turkey in 2023 increases 10.4% to 49.2 million       Turkey’s private sector foreign debt is USD 164.4 billion as of yearend 2023       Turkey’s economy grew 5.5% in 2022       FDI to Turkey is USD 10.6 billion in 2023       Turkey’s current account deficit is USD 45.2 billion in 2023