Economic program on track, working and delivering: Şimşek
LONDON
The country’s economic program is on track, it is working, and it is delivering, Finance Minister Mehmet Şimşek has said, reiterating the government’s continued commitment to implementing it.
“The essence of the medium-term program is achieving and attaining price stability, and we are making good progress. Inflation is down from a peak of 75 percent to about 38 percent and it is trending down,” Şimşek said during a panel at the annual meeting of the European Bank for Reconstruction and Development in London.
“We will do everything to keep it [the program] on track,” he vowed.
Recent turbulence raised some questions marks about expectations and the limited Turkish Lira weakness, Şimşek noted and went on to say “but financial conditions are tighter, which are highly likely disinflationary, while oil prices have fallen that is also significantly disinflationary.”
“We see inflation staying on track,” the minister added.
“Growth could turn out to be slower, but we can live with that. The labor market is tight, the unemployment rate at a 20-year low,” Şimşek also said.
The fiscal position has been historically strong, he stressed.
The reason for fiscal consolidation is to help the Central Bank bring inflation down, according to the minister.
Türkiye’s gross public sector debt to GDP ratio is “barely 25 percent” compared to emerging markets average of over 70 percent, he noted.
“On the fiscal side, the consolidation will stay, the commitment to spending control is strong. Revenue may somehow underperform. But we can live with that, because the spending control is key and that’s disinflationary,” Şimşek said.
They penciled in a current account deficit of 2 percent of GDP this year, the minister noted.
“Quite likely, however, it will be significantly lower than that. Why? Because oil prices are lower and the dollar/euro parity now helps us,” he elaborated.
The external balance will improve, the gross external financing requirement will fall, Şimşek said.
The minister also welcomed the PKK terror group’s decision to disarm and disband, noting that Türkiye has been combating PKK for over five decades, which according to a study cost the country $1.8 trillion.
“This is huge credit positive. We will no longer be wasting our energy and resources on combating terror. We will spend our money on rebuilding the southeastern and eastern part of Türkiye,” he said.
“It will also help stabilize and lift the entire region, including Syria and Iraq,” he added.
