Economist warns of rising rates and debt burden risks in Northern Cyprus

Economist Ahmet Karavelioğlu has issued a warning about possible monetary policy tightening and rising financial risks in Northern Cyprus following the release of new inflation data in Turkey. According to him, April inflation exceeded expectations, reaching 4.18% against a forecast of around 3.5%, while the annual figure reached 32.37%.

The economist believes that similar dynamics may appear in Northern Cyprus. According to his estimate, monthly inflation could exceed 4%, leading to a 12% increase in the cost of living over the first four months of the year, with the annual figure approaching 38%.

This situation, according to the expert, will increase pressure on the Central Bank to raise interest rates. This, in turn, will complicate the position of public finances, which are already under strain due to active borrowing.

Karavelioğlu also criticized current fiscal policy, noting the reliance on Development Bank resources to solve short-term liquidity problems. He emphasized that such an approach is not sustainable and does not solve the problem of debt growth.

The expert paid special attention to the banking sector, warning that the state's borrowing capacity is not limitless. According to him, reaching this limit could create risks for the entire financial system.

The economist urged the authorities to restore financial discipline and manage public debt more responsibly to avoid further deterioration of the economic situation.