Economic program shows success and progress: Şimşek

ISTANBUL

Finance Minister Mehmet Şimşek highlighted significant progress in the country’s economic program, pointing to the lowest inflation rate in the past 50 months as evidence of success.

Speaking at an event in Istanbul on Feb. 28, Şimşek pointed to the rise in food inflation in January, noting: “Unfortunately, we are also seeing price increases in February due to the Ramadan period. Around the world, prices tend to fall during holidays and special occasions, yet in Türkiye, they rise. This is, of course, an interesting phenomenon — one that deserves serious reflection.”

He dismissed claims that disinflation had stalled, arguing that the recent uptick in monthly inflation was driven largely by temporary food price pressures in January and February. Şimşek emphasized that the heavy rainfall in January and February would bring a fruitful year for food and agriculture.

He stressed that the government’s program remains on track and expressed confidence that within three to five months a markedly different picture would emerge.

The minister also outlined the achievements of the government’s economic program.

Şimşek explained that the first phase of the program allowed Türkiye to manage risks effectively, transition to a rules-based market economy, prevent runaway inflation and keep the current account deficit from turning into a balance of payments crisis. Despite substantial earthquake-related expenditures, he noted that the budget deficit was kept under control.

He reported sharp declines across inflation indicators: Service inflation dropped from 91 percent to around 40 percent, goods inflation fell from 56 percent to 25–26 percent and core goods inflation eased to 17.5 percent. These improvements, he said, demonstrate the program’s effectiveness.

In the second stage, he said, Türkiye began accumulating reserves while reducing contingent liabilities, established fiscal discipline and successfully managed the exit from the FX-protected deposit scheme (KKM). Even in 2025, when the economy faced multiple simultaneous shocks, the program continued to deliver results, according to the minister.

Şimşek stated that Türkiye has now entered the third phase, where inflation is felt less in daily life, uncertainty is reduced and the path toward single-digit inflation is within reach.

He emphasized the importance of consolidating gains, keeping the budget deficit below 3 percent of GDP, reducing the current account deficit to under 1 percent of GDP in the medium term and driving productivity- and competitiveness-focused reforms to transform the real sector.

Şimşek highlighted the decline in Türkiye’s financing needs, noting that the Central Bank’s reserves have surpassed $200 billion, with net reserves rising from minus $61 billion to $76 billion. He added that the overall balance sheet had been strengthened by $280 billion.

Pointing to the drop in bond yields and in Turkey’s five-year credit default swaps (CDS), Şimşek stressed that the country’s progress in this area is well ahead of comparable emerging markets.