Turkish President Recep Tayyip Erdogan on Wednesday publicly defended himself for the first time against charges that he oversaw the illegal depletion of the country’s central bank reserves.
Opposition parties have turned “Where is the $128 billion?” into a political slogan after the central bank used vast sums to try and support the lira while it fell to historic lows against the dollar and euro in the past two years.
Economists say the purchases fell within the Turkish government’s remit but were not fully transparent because they did not appear clearly on the central bank’s and the finance ministry’s balance sheets.
Analysts say the use of select state banks in the purchases further clouded the picture and helped raise suspicions from the opposition of impropriety or collusion.
“This money was not gifted to anyone or wasted,” Erdogan told members of his ruling parliamentary party.
“It simply changed hands and went to economic actors… and a large part of it has returned to the central bank,” he said in televised remarks.
The Turkish lira lost 0.7 percent against the dollar during Erdogan’s speech.
Turkey’s financial problems stem in part from Erdogan’s unconventional belief that higher interest rates cause inflation instead of slowing it down.
He urged the central bank in 2019-2020 to keep the rate low to help promote public lending and economic growth.
But inflation kept rising and Turks converted their liras into foreign currencies and gold to preserve their savings.
The central bank stemmed the lira’s losses after raising its key interest rate above the annual rate of inflation — last reported at 16.2 percent — late last year.
Erdogan also approved his controversial but powerful son-in-law Berat Albayrak’s departure from the finance ministry last November.
Albayrak was widely credited with pushing the policy of using central bank reserves to support the lira while keeping interest rates low.
Finance Minister Lutfi Elvan said on Monday that he wanted the central bank to now publish more data about how it used its reserves to support the lira.
He also flatly rejected charges of corruption.
“You may discuss the methods, but you cannot accuse anyone of corruption,” Elvan said.