Economy minister promises reform package to boost economy

ISTANBUL

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A number of economic reforms are in the pipeline to boost the Turkish economy following the Nov. 1 elections, Turkish Finance Minister Mehmet Şimşek has said in an interview with the Financial Times. 

“We are looking at a large set of changes we can now make because we have political certainty,” Şimsek said.

Şimşek’s Justice and Development Party (AKP), which failed to gain enough seats to form a single-party government after the June 7 elections, got nearly half of the votes in a reelection on Nov. 1 however the new government management of the economy remains unknown yet due to legal procedures. Şimşek told the U.K.-based newspaper he did not know if he would continue as finance minister.

Following a rapid period of growth, which peaked with 9.2 percent in 2010, the Turkish economy now faces a rather slower pace, as the country’s GDP stood at 2.9 percent last year. 

The reforms will focus on boosting tax collection, competitiveness, personal savings, employment and pensions, Şimşek said. 

He also mentioned efforts to deepen capital markets inside Turkey and changes to the tax laws which would encourage companies to borrow locally and raise equity instead of debt to fund expansion.

“Mr. Şimşek said reforms would aim to bring the current account deficit — widely seen as the country’s economic Achilles heel — under control by focusing on core issues of domestic consumption and increasing high value exports,” the newspaper said. 

“He also said that concerns about the impact of election giveaways — which include a promised increase in the minimum wage and more payouts to farmers — are overblown since they total far less than 2 per cent of GDP and have already been accounted for in the 2016 budget with controlled spending in other areas. Mr. Şimşek estimated their annual costs to be about 24 billion Turkish Lira, or approximately $8.4 billion,” it said.