Turkish Finance Minister Elvan Resigns Amid Record Drop in Value of Lira

Turkish President Recep Tayyip Erdogan has fought a yearslong battle against central bank economists seeking to raise interest rates in a bit to head off inflation, which he fears will stifle foreign investment in the west Asian country and ultimately hurt the economy.

Turkish Finance Minister Lutfi Elvan announced his resignation on Wednesday following his dismissal by Erdogan, according to the Official Gazette.

Elvan was replaced by his deputy, Nureddin Nebati, making him the country's third finance minister in a year's time. In November 2020, Elvan's predecessor, Berat Albayrak, also resigned amid a contracting economy and plunging value of the Turkish lira. Albayrak, Erdogan's son-in-law and a wealthy conglomerate owner, had been finance minister for five years.

Nebati is a member of the ruling Justice and Development Party (AKP)'s Central Executive Board and is a member of the central board of the Independent Industrialists' and Businessmen's Association (MUSIAD) and the Istanbul Chamber of Commerce's Disciplinary Board. He studied international relations at Istanbul University and received his Phd. in Political Science and Public Administration at the Kocaeli University Social Sciences Institute..

Elvan has similarly requested his leave after the lira's exchange rate saw a record drop on Wednesday. The central bank intervened by selling off foreign reserves, but the lira has still registered a 40% drop in value in 2021, according to the Wall Street Journal.

Hazine ve Maliye Bakanı Lütfi ELVAN görevden affını talep etmiş.. pic.twitter.com/xe6xJwJZ96

— Cihan ARIK (@cihanarkk) December 1, 2021

Turkey's economy actually did remarkably well in the third quarter of 2021, expanding by 7.4% according to numbers released on Tuesday, helped enormously by the return of tourism. However, inflation has also continued to mount, hitting nearly 20% in October as the central bank continued to slash interest rates - something typically seen as likely to increase inflation. The bank has cut borrowing rates by 4% since September.

Still, Erdogan has cast the issue as a national struggle, criticizing opponents of continued rate slashes as opponents of economic prosperity, as well.

“As we struggled in the past against tutelage, coup plotters, terrorist organizations and money barons, today we struggle in the same manner against the interest rate lobby and the enemies of production and employment,” he told AKP lawmakers on Wednesday.

In March, Erdogan shocked observers by firing longtime central bank governor Naci Agbal after months of rising interest rates, replacing him with Sahap Kavcioglu, a longtime critic of Agbal's tight monetary policy. Anxiety over the sharp change ironically helped push inflation even higher.

Erdogan, 67, has been president since 2014, having served 11 years as prime minister before that. He said last week that there would be no snap elections before 2023. He has laid out lavish political goals for the country's centennial year, including major improvements in the country's economy, energy, health care, and transportation.

However, Erdogan's popularity and that of the AKP have been steadily slipping in recent years. A September survey of popular opinion by Metropoll shows Erdogan's approval rating fell from 47.7% in 2018 to 41.4% in September 2021, and approval of the AKP fell from 42.6% in 2018 to 31.8% in September 2021.