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- October 13, 202618°
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- USD49.220.00%
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- October 13, 202618°
Türkiye will maintain its disinflation program, Treasury chief Şimşek says
Treasury and Finance Minister Mehmet Şimşek said at a meeting at the Presidential Complex on Wednesday that Türkiye would maintain its disinflation program. Şimşek said inflation must fall, expectations must improve and two-way foreign exchange flows must emerge before returning to a free-floating exchange rate regime.
Treasury and Finance Minister Mehmet Şimşek said Türkiye would maintain its economic program despite challenging global and geopolitical conditions and achieve its disinflation target.
Şimşek attended an international media meeting on Türkiye's 2027-2029 Medium-Term Program at the Presidential Complex with Vice President Cevdet Yılmaz and Strategy and Budget President İbrahim Şenel.
Economic program to continue
Şimşek said the program's ambitious targets could be subject to criticism but stressed that the commitment to those targets remained in place. He said the direction of economic policy was what mattered and that Türkiye would maintain its current course.
Şimşek stressed that price stability was essential for sustainable high growth and improving income distribution. Saying the disinflation program began to be implemented decisively in mid-2024, Şimşek noted that international experience shows it generally takes 3.4 years for inflation to return to pre-shock levels.
Şimşek said inflation was expected to return to pre-shock levels by the end of 2025, 2026 and 2027, respectively, under this timetable, and rejected claims that the 2027 inflation target had been raised to facilitate monetary policy easing. He said changes in energy, agricultural and other commodity prices, along with challenging geopolitical conditions, had affected the program's forecasts, adding that forecasts could also change when conditions changed.
Three conditions for a free-floating exchange rate
Şimşek said returning to a free-floating exchange rate regime was desirable because the system served as a buffer against economic shocks. However, he said such a return required lower inflation, more firmly anchored inflation expectations and the emergence of two-way foreign exchange flows.
Şimşek said discussions about returning to a free-floating exchange rate did not mean a change was imminent and that speculation in this direction was unfounded. He said the Central Bank was responsible for daily exchange rate policy. Şimşek added that the Medium-Term Program was based on a neutral real exchange rate assumption and that they were not betting on the exchange rate.
Combating illicit finance
Şimşek said Türkiye was determined to combat illicit finance, terrorist financing, money laundering, sanctions evasion and all forms of illicit trade. He said close cooperation and effective information sharing with partners and allies, particularly the United States, were continuing.
Şimşek stressed that all companies operating in Türkiye must fully comply with national regulations and avoid sanctions. He said the latest statements by the U.S. Treasury Department and the allegations were being assessed by the relevant authorities within the framework of the rule of law.
Natural gas payments to Iran
Şimşek said natural gas contracts with neighboring countries such as Iran and Russia were long-term agreements, with some having been in force for decades.
Şimşek said no direct payments were made to Iran for natural gas. He said the money was held in a strictly regulated account under the understanding in force with the United States, and payments could be made only for products such as food and medicine. He noted that an established framework governed the management of natural gas payments.
Şimşek said Iran's share of Türkiye's natural gas imports was relatively small and that significant investments had been made in alternative supply sources and storage capacity. Şimşek also said the United States had become one of Türkiye's main suppliers of liquefied natural gas.
Housing and targeted credit support
Şimşek said $104 billion had been invested in reconstruction efforts in the earthquake zone. Saying 621,000 homes had been delivered or were scheduled for delivery this year, Şimşek said rental inflation stood at around 20 percent in the provinces affected by the earthquake, while it had risen to between 50 and 60 percent in other regions.
Şimşek said supply-side measures had made a significant difference to housing and rental costs. He said the government planned to build 750,000 social housing units financed with public resources to ease housing and rental expenses.
Şimşek said targeted credit programs supported manufacturers, farmers, small businesses and technology investments, adding that these measures contributed to preserving employment and creating new jobs.
Şimşek said the ultimate aim of the economic program was to raise the living standards of people living in Türkiye through sustainable high growth and a fairer distribution of income.
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