And Sinkamba had advised the Zambian Government to forget about the Turkish bailout due to alleged rapid decay in the Turkish economy.
He said Government needs to come to terms with realities by seriously considering other options to sort out the Eurobond.
“At the moment, the Turkish Eurobond bailout is a non-starter. The economy of that country has gotten into serious shambles following President Trump’s doubling of trade tariffs on aluminium and steel. The Turkish lira has since been hit hard forcing it to slide rapidly downwards against the US dollar,” Sinkamba said.
He cited the recent move by the Turkish government to slash its economic growth forecast for this year from 5.5% to 4% as proof that things are deteriorating in Turkey.
“The slump is likely to be much worse if the trade fallout and currency confidences are not restored quickly. Believe you me, Turkey is sliding into a debt crisis. The writing is clearly on the wall for all to see,” Sinkamba stated.
He said that the unfolding scenarios will force Turkey to implement not only currency controls but also ask for a bailout from the International Monetary Fund.
“The measure announced by Erdogan last week to defend the currency is a signal of the beginning to tighter currency and monetary policy controls. There is every reason to believe that the Turkish government may soon introduce emergency interest rate hikes during the current currency crisis as a means to provide short-lived reliefs. There is also every reason to believe the Turkish government may restrict export of hard currency from that country,” he added.
He said “data from the Bank for International Settlements show eurozone banks have loans worth over $150 billion in Turkey which they plan to recall soon. So, Turkey will soon be forced to marshal all resources available to sort out its own loans. For this reason, I doubt that the Turkish government will prioritize sorting out Zambia’s Eurobond loans rather than sort out its own serious mess”.