By Jonathan Spicer, Orhan Coskun and Nevzat Devranoglu
ISTANBUL (Reuters) – The shock departure of Turkey’s top two economic policymakers at the weekend sets the stage for an interest rate hike and other moves to halt a record slide in the lira, analysts said, even as political questions hang over the leadership overhaul.
With no explanation from President Tayyip Erdogan’s government, his son-in-law Berat Albayrak said on Instagram late on Sunday he was stepping down as finance minister after two years for health reasons.
That came after an official notice in the early hours of Saturday that Erdogan had replaced the central bank chief Murat Uysal with a former finance minister. No reason was given for the move, though officials said the currency depreciation was to blame.
The lira jumped as much as 4% against the dollar on Monday, its biggest intraday rally in several months. As recently as Friday it touched a new all-time low after shedding 30% this year, the worst-performing emerging market currency so far in 2020.
The plunge has been driven by concerns over the central bank’s depleted foreign reserves, costly state interventions in foreign exchange markets, negative real rates and the risk of Western sanctions over Turkish foreign and defence policies.
Both Erdogan and Albayrak have also publicly urged lower rates – raising further concerns about the central bank’s policy independence. Last month it bucked broad expectations for a sharp policy tightening and held its key rate steady at 10.25%.
On Monday the new governor, Naci Agbal, said the central bank would focus on lowering high inflation and decisively use all policy tools in a statement that one currency trader described as “market-friendly”.
“Agbal has the power and closeness to go and convey the situation directly to the president,” said a senior official in Erdogan’s AK Party. “It is a difficult post, but steps to stop the rapid rise in the exchange rate must be taken.”
But Win Thin, global head of currency strategy at Brown Brothers Harriman, said “Turkish political risk jumped over the weekend,” citing Albayrak’s resignation statement.
“The reason given was health reasons, but there is obviously more to this than meets the eye,” the New York-based analyst said.
Early on Monday, sources at the presidency finally confirmed Albayrak’s statement, about 15 hours after he took the unusual step of announcing on Instagram that he was leaving government. A Finance Ministry official had earlier confirmed its authenticity. Erdogan would need to approve the resignation.
Turkey, the largest economy in the Middle East, has been hit by two sharp contractions in as many years and its currency has shed some 45% since Albayrak took the reins in mid-2018.
Though economic growth is recovering from the coronavirus fallout, inflation is stuck around 12% and unemployment is high, especially among youth, and is expected to jump again when a ban on layoffs is lifted.
Turkish state banks have sold an estimated $100 billion in dollar reserves this year to support the beleaguered lira but government data shows such interventions have cooled in recent months, with analysts expecting them to ease further under the new leadership.
Economists and opposition politicians have criticised the interventions for exacerbating a sharp drop in the central bank’s net foreign exchange buffer, which has more than halved this year, and for propelling a record rise in Turks’ hard currency holdings.
Analysts at Goldman Sachs and TD Bank expect Agbal, a close ally of Erdogan, to raise the key interest rate by at least 600 basis points as soon as a policy meeting on Nov. 19.
“Many now expect Agbal to quickly hike rates aggressively to stabilize the lira, as he probably would not have taken the post without freedom to pursue orthodox policies,” Brown Brothers Harriman’s Thin added.
(Reporting by Jonathan Spicer, Orhan Coskun and Nevzat Devranoglu; Editing by Ana Nicolaci da Costa)
COVID-19 has sucked the oxygen out of the room on the climate economy – CBC.ca
The Niagara Falls of news releases into any journalist’s in-box attest that there is always plenty of contention for the moving spotlight of media attention.
As early as March of this year, the Pew Research Institute, a think-tank that studies media trends, observed that people had become “immersed in COVID-19 news.”
And while other issues have occasionally nudged the pandemic and its economic impact off centre stage, it is hard to think of many subjects that have so consistently hogged the limelight for so many months in a row.
According to one of Canada’s leading environmental economists, that single-minded focus has both diverted and delayed attention on a subject that he expected in 2020 would finally get its moment in the sun: climate change.
Shut out by pandemic
“For two months or even three, people like me were shut right out because ministers were dealing with aspects of COVID in cabinet,” said Mark Jaccard, one of Canada’s foremost climate scientists who is often described as an architect of the pioneering carbon-pricing scheme introduced by the B.C. Liberals back in 2008.
With what may have turned out to be bad timing, the Simon Fraser University professor’s political manual, The Citizen’s Guide to Climate Success, finally hit bookstores in February — just before the pandemic began to dominate the news agenda.
While inevitably disappointed, the longtime adviser to governments on practical climate economic policy remains philosophical. Jaccard’s biggest idea — one that some climate activists may find frustrating — is that the only realistic path to defeating climate change is political action to install “climate-sincere” politicians and governments and then hold their feet to the fire.
While personal attempts to eat less meat, say, or buy an electric car make individuals feel good about themselves and may influence a few others, Jaccard insists that the short-term economic advantages of adding carbon to the atmosphere are so lucrative that they require concerted government action to push things the other way.
And putting political pressure on governments means garnering media and public attention, something harder to do when the whole world is worried about something that seems far more pressing — namely a deep economic recession caused by a deadly health crisis that just won’t go away.
“You have policy windows,” Jaccard said, referring to those moments such as after Hurricane Katrina, which struck New Orleans and the surrounding area in 2005, or following the past year’s devastating forest fires in Australia and the U.S. west, when the public and politicians are forced to take climate issues seriously.
He said COVID-19 is just the 2020 version of a series of global events that have redirected attention away from the climate change issue just as it was beginning to take off.
‘We got really excited’
“We got really excited about the Kyoto Protocol in the late 1990s, and then along came 9/11 — and everyone got diverted with the U.S. wanting to invade countries in the Middle East,” Jaccard said, referring to terrorist attacks on the United States on Sept. 11, 2001.
“And then you could say the same thing when we got excited about Hurricane Katrina, and you had Republicans and Democrats in the mid-2000s putting together policy … and China started to say, ‘Uh-oh we better get going.’ And then along came the  financial crisis.”
As the world, and especially Canada, seemed to be getting the pandemic under control during the summer, climate advocates were hoping their issue would come to the top of the agenda. But subsequent waves of the disease once again pushed COVID-19 stories to the top of the “most read” columns, narrowing the news hole for climate coverage.
While political analysts were expecting a nod to green spending in Monday’s fiscal update, they say short-term allocations will mostly be diverted, quite reasonably, to bailing out parts of the Canadian economy devastated by a new round of pandemic lockdowns.
Jaccard says that has added to delays, as the latest government plan — to use post-pandemic economic recovery spending to advance the green agenda in a way that will finally put Canada on a path to Paris 2030 — has meant previous policy plans and spending have been deferred.
Despite the latest postponement, Jaccard remains hopeful. Conversations with conservatives have left him with the impression that even a change of government would not prevent Canada from moving forward on the climate change agenda.
And while he thinks the Trudeau government remains “climate-sincere,” he says media attention is essential to keep pressure on the Liberals not to spend too much money on political feel-good plans, such as tree planting, at the expense of real measures to cut carbon output. As The Economist reported recently, growing trees in one place doesn’t mean they aren’t being cut down elsewhere, and natural systems tend to return their carbon back to the atmosphere.
“If you’re allowing someone to keep polluting and then you’re sort of convincing yourself that you have offset that or compensated it,” Jaccard said, “the careful evidence doesn’t support that.”
Part of Jaccard’s continued optimism is due to the election of what looks like a climate-sincere Democratic government south of the border that — even without the support of a Republican Senate — can begin to make greenhouse gas-limiting regulations.
The election of a Joe Biden presidency may have created a new “policy window,” he said, as the U.S. moves toward existing Canadian schemes such as the coal phaseout regulation, where Canada is a leader. Meanwhile, Jaccard expects a U.S. push toward such things as the clean fuel standard, which will coax Canada into following suit as manufacturers insist on one set of rules for all of North America.
Follow Don Pittis on Twitter: @don_pittis
Biden looks to fill out economic team with diverse picks – EverythingGP
Yellen became Federal Reserve chair in 2014 when the economy was still recovering from the devastating Great Recession. In the late 1990s, she was President Bill Clinton’s top economic adviser during the Asian financial crisis. Under Biden she would lead the Treasury Department with the economy in the grip of a surging pandemic.
If confirmed, Yellen would become the first woman to lead the Treasury Department in its nearly 232-year history. She would inherit an economy with still-high unemployment, escalating threats to small businesses and signs that consumers are retrenching as the pandemic restricts or discourages spending.
NEERA TANDEN, Office of Management and Budget director
Tanden is the president and CEO of the liberal think-tank Center for American Progress. She was the director of domestic policy for the Obama-Biden presidential campaign, but she first made her mark in the Clinton orbit.
Tanden served as policy director for Hillary Clinton’s 2008 presidential campaign. Before that, she served as legislative director in Clinton’s Senate office and deputy campaign manager and issues director for Clinton’s 2000 Senate campaign. She also served as a senior policy adviser in the Bill Clinton administration.
If confirmed, she would be the first woman of colour and the first South Asian woman to lead the OMB, the agency that oversees the federal budget.
BRIAN DEESE, director of the White House National Economic Council
Deese, a former senior economic adviser in the Obama administration and now the managing director and global head of sustainable investing at BlackRock, would be the top economic adviser in the Biden White House. He worked on the auto bailout and environmental issues in the Obama White House, where he held the title of deputy director of both the NEC and the OMB.
CECILIA ROUSE, chairwoman of the Council of Economic Advisers
Rouse is a labour economist and head of Princeton University’s School of Public and International Affairs. She served on the CEA from 2009 to 2011, and served on the NEC from 1998 to 1999 in the Clinton administration.
Notably, she organized a letter earlier this year signed by more than 100 economists calling for more government action to mitigate the fallout for Americans caused by the coronavirus pandemic.
Rouse, who is Black, would be the first woman of colour to chair the CEA.
Biden is also expected to name Heather Boushey, the president and CEO of the Washington Center for Equitable Growth, and Jared Bernstein, who served as an economic adviser to Biden during the Obama administration, to serve on the council. Both Boushey and Bernstein advised Biden during the presidential campaign.
Associated Press writers Alexandra Jaffe, Christopher Rugaber and Michael Balsamo contributed to this report.
Aamer Madhani, The Associated Press
Freeland to deliver Liberal plan to revive Canada's post-pandemic economy today – CBC.ca
The federal government will release its long-awaited fiscal update today — a spending plan to help Canadians cope with COVID-19 while recharging the national economy and key sectors battered by the global crisis.
Deputy Prime Minister and Finance Minister Chrystia Freeland will rise in the House of Commons at 4 p.m. ET today to outline details of her plan to both boost job creation and cut greenhouse gas emissions.
Government sources have told CBC News the plan will include new but time-limited spending measures to support hard-hit industries and vulnerable Canadians, while laying the groundwork for the policy priorities presented in September’s speech from the throne.
The update comes in the wake of optimistic reports suggesting promising vaccine candidates could roll out early in the new year — and as COVID-19 caseloads continue to grow alarmingly in some parts of the country. Numbers have reached record highs in some regions, prompting new or extended restrictions and business closures.
The measures in today’s economic statement are expected to include:
- Support for airlines and the tourism and hospitality sector, hit hard by heavy losses due to border closures and lockdowns. The sources suggest the update will include assistance for airlines, hotels and restaurants, and for the companies that supply them.
- Money to help long-term care homes stop the spread of infections.
- Support to help women return to work.
- Stimulus spending for infrastructure projects tied to the government’s promise to reduce greenhouse gas emissions as part of the economic recovery.
Record deficit projected
The government has not tabled a budget for this fiscal year, but in July delivered what it called a “fiscal snapshot” that projected the deficit would hit a record $343.2 billion.
The Trudeau Liberals last delivered an actual budget in March 2019, when they were still in their first mandate.
The Trudeau government has pushed back at calls to deliver an economic forecast since the current health crisis began, maintaining that the pandemic made it impossible to accurately predict economic growth or the scope of necessary emergency spending.
Conservative Leader Erin O’Toole said the government’s delays in procuring rapid testing and vaccines have put workers and the economy in a “risky” situation.
“There is no plan for the economy if we don’t have rapid testing and vaccines as swiftly as possible,” he said during a news conference in Ottawa Sunday.
“We’re already seeing small businesses teetering on the edge. That is leading to the uncertainty and the concern out there about the wellbeing of tens of thousands of Canadian families that have invested everything in their restaurant or their autoshop or a range of businesses that are close to bankruptcy.”
WATCH | What to expect in the long-awaited fiscal update:
NDP Leader Jagmeet Singh said today’s update is the perfect opportunity to announce “bold measures” to address the needs of the Canadians most severely affected by the pandemic.
“The COVID-19 pandemic has shown how fragile the services that were supposed to help people are, and the importance of strengthening our social safety net so that no one is left behind,” he told CBC News.
NDP pushes for child care support
The NDP is calling on the federal government to fund child care services that would allow more parents to return to work safely. It’s also pressing the government to launch a universal pharmacare program.
Green Party Leader Annamie Paul said it’s not enough for the government to present a “laundry list” of spending today. With a vaccine expected next year, she said, it must present a green recovery plan with economic and social investments.
“With a glimmer of hope on the horizon, it is vital that we seize this moment to prepare a green recovery plan that will engage every possible innovation, technology and resource at Canada’s disposal to enhance our ability to face challenges,” she said.
The Green Party is calling for a guarantee that any supports the Liberals offer carbon-intensive sectors are “responsible and conditional.” It also wants to see larger investments in projects and sectors that speed up progress toward a net-zero emissions economy.
Business hopes to see long-term growth plan
Business groups say they hope to see a plan today that charts a course through the ongoing crisis to long-term economic recovery and growth.
Canadian Chamber of Commerce president and CEO Perrin Beatty said he wants to see a shift from broad supports to smaller, more targeted federal programs to help the most vulnerable Canadians and sectors, including the restaurant, accommodation, arts and entertainment and retail sectors.
He said he hopes to see a plan that will boost Canada’s business investment and competitiveness — and not a suite of “unaffordable” new permanent programs.
“Even as we navigate our way through this second wave of the pandemic, Canada needs its government to set the conditions for a strong, business-led recovery. Canadian families and businesses continue to pay a high price because of COVID-19, and the hard work of getting Canada’s economy ready for recovery must start now with a clear and coherent plan,” he said in a media statement.
Cash-strapped municipalities are also looking for good news in today’s statement.
Federation of Canadian Municipalities president Garth Frizzell said he hopes to see “clear successor arrangements” to the safe restart agreement, which saw the federal government set aside $19 billion for the provinces to help them weather the second wave and drive job growth post-pandemic.
“The fall economic statement is an opportunity to build on the federal-municipal partnership that has kept Canadians safe, and essential front line services running strong, since the beginning of the pandemic,” he said.
“They rely on us to keep doing that through 2021, and that’s why municipalities need to see a clear commitment that the federal government will continue to work with us to ensure support for municipal operating and transit costs.”
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