Erdogan’s Public Spending Craze to Pause Over Inflation Fight

(Bloomberg) -- The public spending frenzy that Turkish President Recep Tayyip Erdogan built his political career on is set to cool as the government prepares to freeze new projects in order to focus on fighting inflation.

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Savings plans include slowing some early-phase infrastructure projects and stopping new ones unless they’re considered essential for the next three years, according to an official document seen by Bloomberg. That would likely impact mega-projects like Canal Istanbul, Erdogan’s proposal to build a new waterway connecting the Black Sea to the Marmara Sea.

Other measures include a pause on the purchase and leasing of vehicles and property used by the government, as well as cuts to public sector hiring and social events for foreign delegations, according to the document.

It’s another indication of the turnaround from Erdogan’s policy before last year’s national elections, when he supported cheap money and increased state handouts to voters.

Since then, the benchmark interest rate has been hiked nine times to 50% to tame inflation that’s set to peak soon at around 75%. The cost-of-living crisis damaged the president’s popularity in local elections in March, when his governing AK Party suffered a historic defeat in key cities. The budget is also still reeling from deadly earthquakes that hit the country in Feb. 2023.

The Treasury and Finance Ministry declined to comment. Minister Mehmet Simsek said on Friday that the government would announce a new savings program on Monday.

Read more: Turkey Said to Plan New Fiscal Measures To Tackle Inflation

--With assistance from Beril Akman.

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