Turkey’s Erdogan Names Loyalist as Finance Minister Amid Lira Rout

Turkey’s President Recep Tayyip Erdogan named a loyalist as the country’s new finance minister Thursday, after the incumbent resigned over clashes with the longtime leader’s unconventional economic policies that have intensified a currency crisis shaking the country.

Nureddin Nebati, a former deputy finance minister, replaces Lütfi Elvan at the top of the finance ministry.

The lira fluctuated on Thursday following the news, shedding 1.5% of its value against the dollar.

The change comes after a dizzying slide in the Turkish lira, which has lost some 45% of its value this year on concerns about the country’s economic policy, after Mr. Erdogan pressured Turkey’s central bank to cut interest rates despite rising inflation in an attempt to boost growth. Central banks usually raise rates to contain inflation.

Mr. Erdogan has vastly expanded his control over economic policy in recent years, removing three central bank governors in the span of two years and firing other senior officials who disagreed with his unconventional views.

Mr. Elvan was one of the last voices advocating for mainstream economic policies within Mr. Erdogan’s government, according to officials and analysts. Mr. Nebati has voiced support for Mr. Erdogan’s policies in recent weeks.

“Mr. Lütfi Elvan and some others like him have a more orthodox view on economy and they are not able to adapt to new and innovative economic policies that are necessary after the pandemic in our country and in our world,” said a Turkish official. “Our president felt that Nureddin Nebati would adapt more quickly and act faster to this new phase.”

Mr. Erdogan holds the unorthodox view that lower interest rates will contain inflation while spurring economic growth. Central banks normally raise interest rates to control inflation by discouraging borrowing and encouraging saving.

The rapidly depreciating lira is raising concerns about a broader financial and economic crisis in Turkey, and adding to pressures on ordinary Turkish people who are struggling with increased costs of food, housing, fuel, and other essentials.

The crisis has sparked protests in Turkish cities with riot police lining the streets of Istanbul and crowds of people calling on Mr. Erdogan to resign. Opposition parties have renewed calls for early elections in recent weeks.

In recent days Mr. Erdogan and other Turkish officials have said that his policies are designed to stimulate the economy, and that a lower lira would encourage exports.

In November, Mr. Elvan contradicted that vision, saying the government needed to control inflation and that economic growth needed to be balanced with an equitable distribution of incomes.

“The comments that our government is aiming for a high exchange rate in order to support exports are not true,” Mr. Elvan said on Nov. 12.

When Mr. Erdogan gave a speech to members of his party calling for interest rate cuts on Nov. 18, Mr. Elvan sat with his hands clasped while other officials cheered the president. A photo of the moment went viral, fueling expectations that he would soon leave the government.

The new finance minister, Mr. Nebati, is a member of Mr. Erdogan’s party who has been a vocal supporter of the Turkish president’s push to lower interest rates as a part of a broader attempt to transform the economy and encourage exports.

“Every time we intended to implement our low interest-rate policy since 2013, we faced strong objections. This time we are determined to implement it,” Mr. Nebati tweeted in November.

Mr. Elvan had served as the country’s finance minister since November last year following the resignation of the previous finance minister, Berat Albayrak, who is Mr. Erdogan’s son-in-law.

“May God grant me the ability to implement with good deeds the duty of minister of treasury and finance for which our president deemed me to be worthy,”  said Mr. Nebati in a tweet on Thursday.