Erdogan Has Hidden an Economic Disaster Deep in Turkish Banks
And he won’t be able to keep the game going for much longer.
BY CHRIS MILLER | AUGUST 11, 2020, 1:48 PM
Turkish President Recep Tayyip Erdogan is not usually known as an economic innovator. But for the past year, his government has been running a high-stakes economic experiment. The test: How long can Turkey hide the fact that it is spending far beyond its means? Normally when governments spend more than they tax, the difference appears as a budget deficit. They fund that deficit by issuing bonds, which are traded on international markets and so are easy to track. If the debt load grows too large, and if borrowing costs spike, then then country must default or seek a bailout. This type of debt crisis isn’t pleasant, as Argentina or Greece or Pakistan could attest, but it is at least straightforward and familiar.
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