Şimşek rules out scenarios on real depreciation of Turkish Lira

ISTANBUL

Finance Minister Mehmet Şimşek has ruled out scenarios regarding the real depreciation of the Turkish Lira after the upcoming local elections.

“We do not have an exchange rate target. We are implementing a policy set which makes the lira attractive,” Şimşek said in a televised interview on March 4.

Türkiye’s current account deficit has been shrinking, and the country’s need for foreign currency is declining, according to the minister.

When the economic program is implemented successfully, the lira will gain credibility and will not lose value, Şimşek said.

“We do not foresee a real depreciation of the currency. Expectations regarding the devaluation [of the lira] after the elections do not seem very meaningful to me,” the minister added.

The local elections in Türkiye are slated for March 31.

Türkiye has witnessed a new inflow of portfolio investments, Şimşek said, noting that countries, like Türkiye with a “story,” will see fund inflows.

“We have established good dialogues with the World Bank and other international banks. I attended the G20 [finance ministers and central bank governors’ meeting]. We talked with all these multilateral banks. They will provide serious resources… We expect project loans of $12.7 billion.”

Foreign exchange inflow to Türkiye will increase, Şimşek said.

The minister also said there will not be increases in income tax, corporation tax or value-added tax.

“We do not take any steps that would unsettle the markets. Any other tax regulation which may disrupt the stock exchange or any other markets is on our agenda,” Şimşek said.

The economic program unveiled in September last year is built on three pillars, the minister reiterated. “These are reducing inflation to single-digits, reinstating fiscal discipline and lowering the current account deficit below the 2.5 percent [of GDP] permanently. And the program works.”