Measures on public savings to be announced: Şimşek
ISTANBUL
A series of measures designed to boost public savings will be announced on May 13, Treasury and Finance Minister Mehmet Şimşek has said, without providing other details.
Şimşek has been saying for some time that the authorities have been working on steps to be taken to increase public savings.
“We are carrying out intensive studies similar to this. We will continue our work uninterruptedly,” Şimşek said at an event on May 10, adding that the economic program is working.
He stressed that the earthquakes in February last year had some impacts on the budget.
“We have taken measures to reduce the budget deficit, such as increasing taxes, the value-added tax that, which had inflationary effects. We will not resort to tax increase this year,” Şimşek said.
Şimşek reiterated that inflation will start to decline this summer.
The minister voiced confidence in the Central Bank team, saying that “they are doing a very good job.”
This week the Central Bank lifted its inflation forecast from a previous 36 percent to 38 percent for the end of 2024, while Governor Fatih Karahan has vowed that “they will definitely not allow a permanent deterioration in the inflation outlook.”
The bank kept its inflation forecasts for 2025 and 2026 unchanged at 14 percent and 9 percent, respectively. The bank expects inflation to stabilize at 5 percent in the medium term.
“We will establish price stability. Our priority is to reduce inflation and on the monetary policy side we will do what is necessary to bring inflation to single digit,” Şimşek said.
Domestic demand is still strong, but it will soften, and the contribution of net exports will improve with the policies implemented and the recovery in Türkiye’s main trading partners, the minister said.
‘Current account deficit declining’
The current account deficit declined from more than $60 billion in May last year to under $30 billion as of February, this also shows the economic program is working, according to Şimşek.
“We aim to reduce the current account deficit below 2.5 percent of national income,” he added.
Türkiye does not have a problem accessing financing, as Turkish banks and companies are in a much better position to have access to global funds, Şimşek said.
The credit rating agencies have become aware of this situation and raised Türkiye’s rating, even though with a delay, the minister said, noting that Türkiye’s credit debt swap (CDS) fell below 300 basis points, which marks the lowest level since the start of 2020.