Is Mehmet Şimşek on His Way Out? Economic Leadership in Ankara Under Scrutiny

A headline in the pro-government newspaper Yeni Şafak has reignited speculation in Ankara over whether Finance Minister Mehmet Şimşek will be removed from office. As economic uncertainty intensifies and political tensions rise, insiders and analysts are questioning whether the architect of Turkey’s “return to rationality” in economic policy still has the backing of the ruling AKP.

Prof. Öner Günçavdı: “Yeni Şafak Has Influence – Remember What Happened to Naci Ağbal”

In an interview with journalist Ruşen Çakır on Medyascope TV, economist Prof. Öner Günçavdı emphasized the political weight behind the Yeni Şafak article, noting that similar editorial pressure played a role in the ousting of former Central Bank Governor Naci Ağbal. “We now know these statements aren’t made in a vacuum — the paper has an audience and influence,” Günçavdı said.

He warned that the current situation is even more severe than during the Ağbal era and suggested the article could be an early signal of internal shifts within the ruling party.

“Whether Şimşek Stays or Goes Might No Longer Matter”

Prof. Günçavdı also argued that the credibility of Turkey’s economic program — which he believes was already under threat — may not be significantly altered by Şimşek’s departure:

“When Mehmet Şimşek came on board after the 2023 elections, he was brought in to resolve the liquidity crisis and restore market confidence. His presence was meant to signal a return to rational, orthodox economic policies. But over time, as politically sensitive reforms stalled, his room for maneuver has narrowed.”

According to Günçavdı, Şimşek initially had the optimism and autonomy to pursue tighter monetary policy, but gradually became a figurehead constrained by political realities.

Nuray Babacan: Şimşek Isolated Within the AKP

Prominent journalist Nuray Babacan, known for her reliable reporting on Ankara’s political circles, recently claimed that Şimşek has become increasingly isolated within the AKP. According to her sources, only Cevdet Yılmaz and Nihat Zeybekci continue to support the finance minister — and even their support may not be enough to protect him.

Political Turmoil Triggers Market Panic

The arrest of Istanbul Mayor Ekrem İmamoğlu has sent shockwaves through Turkey’s political and economic landscape. Market confidence has taken a fresh hit, with interest rates climbing, businesses fearing insolvency, and unemployment worries rising.

Earlier this year, the Central Bank raised its benchmark interest rate to 50%, briefly calming inflation expectations. However, the detention of a major opposition figure has reignited concerns about political risk, sending currency and bond markets into renewed volatility.

Erdoğan Faces Crucial Decision: Rationality or “Nas”?

Attention now turns to President Recep Tayyip Erdoğan, as speculation grows over a potential cabinet reshuffle. Some insiders suggest Erdoğan could pivot back to his unorthodox “Nas”-based economic model — grounded in the belief that interest is inherently harmful — if he dismisses Şimşek.

Others warn that removing Şimşek could collapse market confidence, with one Ankara insider quoted as saying, “If Şimşek goes, the economy goes with him.”

A Costly Past: The 2021 Rate Cuts and KKM Fallout

Analysts also point to the damaging effects of Erdoğan’s previous experiment with ultra-low interest rates. In late 2021, policy rates were cut from 19% to 8.5%, triggering a surge in inflation and currency depreciation. In response, the government launched the FX-protected deposit scheme (KKM) to stabilize the lira — a policy that has now cost taxpayers over 1.5 trillion TL.

The Central Bank, meanwhile, continues to post record losses, further straining Turkey’s fiscal position.

A Fork in the Road: Patience or Populism?

The looming question for markets is whether Turkey will stick with rational economic policy or shift back toward populist measures. Some observers expect Erdoğan to ask the public for patience under a new face, while others warn of a complete U-turn in policy.

At 17:15 local time, the BIST-100 index was down 0.55%, while the USD/TRY exchange rate had climbed by 0.26%. Banking sources told ParaAnaliz that FX reserves at the Central Bank began to decline again following the Yeni Şafak article, reflecting renewed market anxiety.

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