EBRD Chairman: Turkey’s central bank reshuffle raises financial stability concerns

LONDON, April 7 (Reuters) – The change in the head of Turkey’s central bank has raised concerns about its financial stability and policymakers must focus on tackling inflation, the president of Turkey said on Wednesday. European Bank for Reconstruction and Development.

More broadly in the 38 economies under the bank’s jurisdiction, the slow rollout of coronavirus vaccination programs is the biggest threat to the recovery, Odile Renaud-Basso told Reuters.

Turkish President Tayyip Erdogan brutally sacked central bank chief Naci Agbal last week, just days after Agbal announced an exceptional rate hike to curb inflation. Erdogan – a self-proclaimed enemy of interest rates – sacked three governors in less than two years. Read more

“It is clear that changing central bank governors so often is not good for (his) … credibility,” EBRD president Odile Renaud-Basso told Reuters.

It was now vital for policymakers to stay focused on a restrictive monetary policy, fight inflation and not reverse the measures taken by Agbal.

“There are some concerns about financial stability and the next steps will be very important,” she said, adding that she hoped to visit the country – the EBRD’s main investment destination in 2020 – soon.

Erdogan on Wednesday aimed to cut interest rates below 10% and said his government was determined to bring inflation down to single digits. [nL8N2M02IM]

Turkey received 1.7 billion euros ($ 2.0 billion) of the record 11 billion euros that the EBRD invested last year in its region – which spans central Europe and Eastern Egypt, Tunisia and Morocco – to help mitigate the economic effects of the pandemic.

Renaud-Basso said she expected investments to reach the same level this year, with Turkey once again being one of the main beneficiaries.


The “big risk” the EBRD economies face this year is the difficulty in accessing COVID-19 vaccines, she said.

“If countries are not in a position to get rid of or ease the restrictions, the recovery is very much at stake, and this is especially true for economies heavily dependent on tourism,” she added, citing Georgia. as an example.

Speaking of other countries of operation, Renaud-Basso said the bank would continue to invest in private sector companies in Belarus, although it was carefully monitoring the political situation and avoiding companies with links to local authorities. .

Majority-owned by G7 powers, the EBRD has come under scrutiny after other institutions such as the EU’s lending arm, the European Investment Bank (EIB), said they would stop funding new projects in Belarus as part of the bloc’s response to last year’s contested re-election of President Alexander Lukashenko.

With a mandate to operate in countries that “apply the principles of multi-party democracy and pluralism,” the EBRD suspended all investments in Russia in 2014 after Moscow’s annexation of Crimea.

“We are not at this point in Belarus,” she said.

($ 1 = 0.8408 euros)

Reporting by Karin Strohecker; edited by John Stonestreet

Our standards: Thomson Reuters Trust Principles.

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