Turkish opposition urges probe into allegations of central bank corruption

Turkey's main opposition Republican People's Party (CHP) has called for an investigation in the Ottoman Parliament into the dismissal of former Central Bank Governor Naci Agbal amid rumours of speculation and corruption. Thus, 16 CHP deputies initiated the parliamentary request in this regard. 

The CHP demanded that the government reveal the amount of public money lost and the names of the officials who allegedly benefited from the foreign currency fluctuations created between the announcement of interest rate hikes on 18 March and Naci Agbal's dismissal two days later.

The Turkish central bank has been at the centre of controversy for some time now, with the governor's post having been changed three times in the last two years, a situation that has led to high market volatility and the Turkish lira and stock market falling to very low levels, thus driving away foreign investors interested in the Eurasian country's economy. 

Naci Agbal was appointed in November last year and was described as a very "competent" person for the job, but was sacked two days after he proposed a higher-than-expected interest rate hike.

"The Central Bank and all other banks have the list containing the names of those who benefited from the currency fluctuation. It is an organised movement and 83 million Turkish citizens should know who benefited from this abrupt dismissal. Those who leaked this confidential information should be revealed immediately," said CHP deputy Gursel Tekin, in remarks reported by the Arab News media. Tekin also called on Turkey's Financial Crimes Investigation Board to audit transactions during the period.

Last week, Ali Babacan, leader of the opposition DEVA party and former economy minister, drew attention to the allegations surrounding Agbal's dismissal. Babacan said Agbal may have been fired because he planned to investigate the sale of $130 billion in foreign currency reserves during the tenure of former finance minister and Erdogan's son-in-law Berat Albayrak. "We don't know if this is true, but I wouldn't be surprised if it is," he said. 

The Turkish central bank's foreign exchange reserves have fallen by 75% over the past year and now stand at just $11 billion. This is a sign of mismanagement at the institution, according to analysts. 

Agbal's dismissal led to an 11% devaluation of the Turkish lira against the US dollar after the appointment of Sahap Kavcioglu as the current governor of the Turkish Central Bank. 

Kavcioglu is a well-known advocate of lower interest rates and is likely to shape a new approach that works in favour of the Recep Tayyip Erdogan-led government. 

However, economists warn that if the central bank cuts interest rates, exchange rates will soar further and a balance of payments crisis will emerge.

Recep Tayyip Erdogan's decision to take over the Turkish Central Bank sparked criticism among economists and investors. The international financial agency Moody's considers the dismissal to be detrimental to bank funding as it damages investor confidence in Turkey. "Without the credibility of the central bank, access to the market is likely to become more costly again," it said. 

The financial sector also believes that the frequent layoffs in this institution affect the economy. "Constant changes in the economic team do not bode well, it is not good for policy credibility," said Yerlan Syzdykov, head of Amudi. The new head, Sahap Kavcioglu, is the fourth governor of the central bank in less than two years. For years, due to Turkey's economic crisis, investors have pointed to the country as one of the most vulnerable markets to any changes in the global economy. 

Nevertheless, Erdogan has called on international investors to have confidence in Turkey's strength and potential. "We will soon achieve a much better position by growing the Turkish economy on the basis of investment, production, employment and exports," the Turkish president said. Also, Kavcioglu has begun to lay the groundwork in his new position at the head of the Central Bank. "The Central Bank of Turkey will continue to use all its monetary policy instruments effectively to achieve its objective: to bring down inflation in a lasting manner," he said in a statement.