Türkiye ramping up efforts to boost reserves, says Şimşek

ANKARA

Türkiye is accelerating efforts aimed at obtaining additional foreign resources for the country in order to further strengthen its reserves, Treasury and Finance Minister Mehmet Şimşek said.

The Central Bank’s net international reserves surged by $8.5 billion last week, Şimşek added in a post on Twitter, noting that this was the largest weekly increase ever on record.

He also announced that withholding tax exemption for FX-protected deposit accounts will be extended until the end of 2023.

“We will continue to make the Turkish Lira instruments attractive,” the minister said. “The return to rational policies will continue gradually.”

Şimşek, who worked with President Recep Tayyip Erdoğan in the previous governments, was appointed to the helm of the economy after Erdoğan reshuffled the cabinet in the wake of the May elections.

Transparency, consistency, accountability and predictability will be the guiding principles for creating a more prosperous and resilient Türkiye, Şimşek said earlier this month after swearing in as the new finance minister, replacing Nureddin Nebati.

“Our immediate priority is to strengthen our team and design a credible program,” he said at that time.

Shortly after, Hafize Gaye Erkan was appointed the Central Bank governor to replace Şahap Kavcıoğlu.

The Central Bank’s Monetary Policy Committee (MPC) meeting was held on June 22, shortly after Erkan’s appointment.

At this meeting, the bank increased its policy rate - the one-week repo auction rate - from 8.5 percent to 15 percent. This was the first rate hike since March 2021.

Monetary tightening will be further strengthened as much as needed in a timely and gradual manner until a significant improvement in the inflation outlook is achieved, the bank said after the MPC meeting.

To increase the functionality of market mechanisms and strengthen macro-financial stability, the committee will simplify and improve the existing micro- and macroprudential framework, the bank said, adding that guided by impact analyses, the simplification process will be gradual.

And last week, as a first step in this context, the bank announced that the securities maintenance regulation was simplified to increase the functionality of market mechanisms and strengthen macro-financial stability.

Separately, the Treasury and Finance Ministry on June 26 unveiled its domestic borrowing program for the next three months.

The Treasury plans to borrow 270 billion Turkish Liras during the July-September period against its domestic debt redemption of 354.8 billion liras.

As part of its borrowing strategy, the Treasury will hold tenders for the U.S. dollar-denominated bonds and the U.S. dollar-denominated lease certificates in July.