Türkiye on transition period to disinflation, says Finance Minister Mehmet Simsek

Türkiye’s program aims to achieve price stability, restore fiscal health, narrow the current account deficit and rebalance growth, says Simsek

Türkiye is still in a transition period to a disinflation path, said the Treasury and Finance Minister Mehmet Simsek Tuesday.

He added that “Disinflation will come, (as) monetary policy works, but it works with lags.”

Addressing domestic and foreign investors at an event in Istanbul on Tuesday, Mehmet Simsek said Türkiye’s program aims to achieve price stability, restore fiscal health, narrow the current account deficit, rebalance growth and implement structural reforms to boost productivity and competitiveness.

“There has been a course correction in monetary policy. So we call it monetary policy normalization, which means tightening,” he noted.

He noted that the compound interest rate is currently 56%, one year ahead of inflation, which markets expect to be roughly 38%. He added that the Central Bank thinks it has done enough in terms of rates.

“But of course, there is going to be additional support as selective credit tightening and quantitative tightening,” he noted.

The transition period will last until this June, and after that, there will be a speedy disinflation period, he underlined.

He also said Türkiye is reviewing expenditures and combating informal economic activity.

Good infrastructure development

Saying that Türkiye needs investments in energy, fiber optics, and the green transition, Simsek invited the private sector to participate in public-private partnership projects in Türkiye.

“As the government, we have invested about $258 billion over the past 20 years in infrastructure, (and) as the government we need to invest another $200 billion,” he noted.

He said that Türkiye has done well in road infrastructure and airports and is building a high-speed railway network, which it needs to invest at least $70 billion into over the next 30 years.

“Because that is key to competitiveness, it is also key to sustainability and resilience,” he added.

On the country’s official reserves, he said they have improved significantly since last May.

Source: AA