Decline in CA deficit shows economic program works, says Şimşek

ANKARA

A decline in the current account deficit shows that the government’s medium-term economic program is working, Treasury and Finance Minister Mehmet Şimşek has said.

He noted that the deficit was lower than expectations in February and the gap declined by $5.8 billion compared with the same month of last year.

The current account deficit came in at $3.27 billion in February, showed the data from the Central Bank on April 17.

There was an annual improvement of $28.3 billion dollars compared to the peak in May 2023, Şimşek wrote on X, formerly Twitter.

“We expect this decline to continue gradually in the coming months with the impact of the policies we have implemented for disinflation.”

The trend in the current account balance indicates that the deficit will be less than 2.5 percent of GDP at the end of the year, according to the minister.

The decline in the current account deficit shows that our medium-term program is working, said Şimşek.

“While the decrease in the current account deficit will support foreign exchange reserve accumulation, it will also support disinflation through macro-financial stability,” Şimşek added.

In the first two months of 2024, the deficit amounted to $5.8 billion, comparing favorable with a deficit of $19.5 billion in the same period of 2023, showed Central Bank data.

The 12-month cumulative deficit was $31.8 billion as of February, down from $37.6 billion in the previous month. This figure was $60.15 billion in May last year.

Foreign direct investments posted a net outflow of $142 million, while portfolio investments recorded a net inflow of $4.4 billion in February.

The goods deficit amounted to $4.75 billion, rising from January’s $4.4 billion but it was some 55 percent lower compared to February 2023.