Turkey finds itself face-to-face with a possible financial crisis, thanks to its president's stranglehold over politics and the economy, but its causes have been long in the making.

The lira's slide to successive record lows -- the currency has lost more than 16 percent this year -- is a harbinger of more financial instability to come as the cost of foreign currency-denominated corporate debt balloons out of control. The central bank's inaction in the face of this acute stress in the debt markets, which is spreading through the economy, is just a symptom of Turkey's illness - a vote-hungry leadership that is following, blindly, populist policies at almost any cost.

It was back in May 2013 when the U.S. Federal Reserve Bank first announced that it would embark on monetary tightening, reversing an expansionary path that had wrested the country and the rest of the globe from a complete financial meltdown.

As emerging market currencies began to stumble, many governments began to put their houses in order in anticipation of what was to come -- an exodus of capital from developing economies back to the United States.

But in Turkey, no such thing happened. Instead of embarking on reforms, the Justice and Development Party (AKP) government sought to grow the economy to boost its support in successive elections and a nationwide referendum on expanding Erdogan’s powers, while blaming the economy’s increasing fragility on its political enemies.

Back in 2013, then-Prime Minister Recep Tayyip Erdogan blamed a popular uprising against his government -- known as the Gezi Park protests -- for Turkey's economic ills and the lira's weakness.

In December 2015, when the Fed began increasing its policy rate, Erdogan was pointing the finger at the clandestine Islamist Fethullah Gulen movement for provoking economic ills as the lira slid further against the dollar. In the meantime, his government sought to stimulate the economy and few or no reforms were forthcoming, despite constant pledges.

Then came the failed military coup of the summer of 2016, which was truly an economic as well as a social shock for Turkey. In response, the AKP government took an existentialist approach to crush all its opponents, which also included critics of its economic policies.

In economics, there is always an opportunity cost for every choice. In Turkey’s case, Erdogan has attempted to stimulate the economy through a succession of measures including tax breaks, loan guarantees and financial handouts. But Turkey's growth, which exceeded 7 percent last year, came at the expense of accelerating inflation and a widening current account deficit, which has now reached more than 6 percent of gross domestic product.

Meanwhile, Turkish corporates, already hooked on cheap financing as a wave of capital swept across emerging markets after the 2008 crisis, saw interest rates rising in Turkey and inflation accelerating and stepped up their foreign borrowing, which now exceeds $225 billion, or about 30 percent of GDP.

As the lira slides, it is making foreign debt more and more difficult repay. Turkish banks have already announced a jump in restructured lending. At the same time, inflation is expected to accelerate to about 15 percent this year from the current 10.9 percent, already more than three times the emerging-market average. The budget deficit is growing towards 3 percent of GDP.

Erdogan, who is seeking to transcend Mustafa Kemal Ataturk as Turkey's most powerful leader by introducing a full presidential system of government at the June 24 election, has over the past decade wrenched economic as well as political decision-making from a trusted team of experts who had guided the country's path towards developed nation status for more than a decade.

Consequently, his view that interest rates cause inflation is dominating economic and monetary policy. Warnings from investors, ratings agencies and the International Monetary Fund that this approach may lead Turkey into rack and ruin have gone unheeded.

Erdogan, surrounded by a small clique of advisers at the presidential palace, has largely defeated his political enemies. Now, it appears, he believes that he can follow up dubious political decision-making, which has brought him more power but ruined Turkey’s democratic credentials, with untested economic policies, rooted in a misunderstanding of basic economics, to further his agenda even as the lira tanks and interest rates on loans and bonds surge.

And now it is very likely that Erdogan, his ministers and a compliant press will seek to divert the blame for an impending financial disaster away from themselves and onto ill-defined enemies in the financial world, already termed in Erdogan's speeches as "üst akıl", or "the powers that be".

Even if the lira continues to tank, a rate hike before the elections seems unlikely. Erdogan will consider that such prudent economic policies, which would amount to a complete reversal in his stance, do not suit his short-term target -- winning on June 24 at all costs, even if those costs include a financial crisis.