London: Trkiye will continue to support disinflation with demand and supply related policies and measures in food, housing, and energy, while accelerating reforms, the Turkish treasury and finance minister said on Wednesday. Turkish Finance Minister Mehmet Simsek attended the Bank of America (BofA) Securities Trkiye Conference in London, marking the event's return since its last occurrence in 2018.
According to Anadolu Agency, some 250 investors participated in the event, setting a new precedent in its history. The conference is scheduled to continue on Thursday and Friday. Minister Simsek pointed out that the decline in inflation will persist, driven by the delayed impact of monetary policy, fiscal measures, supportive wage policies, and a regulated prices package aligned with the inflation target.
The finance minister emphasized that Trkiye's budget deficit is projected to decline to approximately 3% of gross domestic product (GDP) this year due to reduced public spending. Simsek detailed updates to the lump-sum tax on fuel, tobacco, and alcoholic beverages, adjusted according to the domestic producer price index (D-PPI) for the prior six months.
He highlighted that the increase rate in the special consumption tax (SCT) on fuel was capped at 6%, below the six-month D-PPI. 'The regulation's impact on average sale prices is about 1.4%, resulting in a sacrifice of 12 billion Turkish liras ($338.4 million) in tax revenues. Meanwhile, the effect of the D-PPI revisions on tobacco and alcoholic beverages will remain below the year-end inflation target,' Simsek said.
The minister mentioned that services' weight, updated with revaluation, is only 0.36% in the consumer price index (CPI) basket. He outlined plans to support irrigation and land consolidation projects, bolster the food supply chain and logistics, and aid in the reconstruction of the earthquake-affected zone in southeastern Trkiye.
Simsek indicated that efforts in social housing and urban transformation will intensify as part of supply-side policies, alongside energy transformation prioritizing domestic renewable resources. He noted that reductions in gold and energy imports have significantly helped lower the country's current account deficit, decreasing the need for external financing.
'We aim to enhance productivity through structural reforms, trade integrations, digital and green transformation initiatives, and infrastructure investments,' Simsek stated. He asserted that Trkiye remains resilient amid increasing geopolitical tensions and protectionist trends, as global defense spending reaches all-time highs.
Simsek underscored Trkiye's diplomatic efforts, global role, refugee policies, and leadership in humanitarian aid, highlighting the country's soft power. 'Our free trade agreements with 54 countries, including the EU, exhibit our resilience against trade fragmentation,' he said.
Trkiye's robust presence in the global construction and contracting sectors positions it as a potential key player in the reconstruction of Ukraine, Libya, Yemen, Gaza, and Syria, contingent upon the restoration of peace in these regions.