Turkey's government vows to cut public spending

Turkey's government vows to cut public spending

Turkeys government vows to cut public spending

The Turkish government has focused on cutting public spending, Treasury and Finance Minister Berat Albayrak has announced, adding that the new economic program would establish a framework to reduce inflation.

On July 24, he came together with top businesspeople and representatives of non-governmental business organizations in Istanbul, one day after a meeting with a series of economists.

In a statement after the July 24 meeting, Albayrak said they continued to hold consultation meetings with all of their counterparts in the area of economy for the purpose of preparing a comprehensive Medium-Term Economic Program (MTP).

“In today’s meeting, we listened to participants’ views on a range of issues, including the fight against inflation, efforts to maintain sustainable and healthy growth, fiscal discipline, and identifying Turkey’s potential going forward. In this regard, our efforts to create a Medium-Term Economic Program firmly based on facts and with a focus on those goals continue in cooperation with all counterparts,” he said.

Albayrak noted that the cabinet had started taking precautions to reduce public spending in the 2018 financial year.

“We will implement legal changes related to promoting the Single Treasury Account, which will facilitate the managing of public cash assets single-handedly and more efficiently,” Albayrak added.

Turkey’s central government budget balance recorded a deficit of 25.6 billion Turkish Liras ($5.3 billion on July 16 parity) in June with a dramatic year-on-year increase due to rising public expenditure ahead of the elections, official data showed on July 16. The gap was 13.7 billion liras in the same month of 2017. Still, revenues showed a healthy increase thanks to hefty growth in tax income, enabling the deficit not to exceed the budget target dramatically.

Measures to reduce inflation

He also noted the steps the cabinet wants to take in the fiscal policy will make the maximum contribution to the disinflation process.

“The new plan [MTP], which will be declared soon, will establish a framework geared towards reducing inflation,” the minister noted.

Turkey’s rising inflation rate has been one of the biggest concerns among investors. Inflation hit its highest in 14 years in June, at 15.39 percent, as the weakening lira drove up food and other prices.

“The new plan and our future steps will make valuable contributions to the fight against inflation, which will be visible in the short run. We will decisively take necessary measures to this end,” Albayrak said.

“The fight against inflation will continue in coordination with steps necessary to meet growth targets, with a holistic approach and in line with mutually complementary policies,” he added.

The meeting was attended by more than 20 leading businesspeople, including Fiba Holding Chair Hüsnü Özyeğin, Yıldız Holding Chair Murat Ülker, Akfen Holding Chair Hamdi Akın, Doğuş Holding Chair Ferit Şahenk, Zorlu Holding Chair Ahmet Nazif Zorlu and Anadolu Group Chair Tuncay Özilhan, as well as the president of leading business associations, including Turkish Industry and Business Association (TÜSİAD) head Erol Bilecik, Turkish Union of Chambers and Commodity Exchanges (TOBB) President Rifat Hirsacıklıoğlu and Turkish Exporters Assembly (TİM) President İsmail Gülle.

Turkish economy, Turkish Exporters' Association,