Mehmet Şimşek speaks at TÜSİAD High Advisory Council meeting: 'The hardest part of inflation is behind us'

Treasury and Finance Minister Mehmet Şimşek made statements at the TÜSİAD High Advisory Council meeting.

Stating that the improvement in reserves has reached 80 billion dollars, Şimşek said, "We previously achieved this type of improvement in 11 years; this improvement was achieved in one year."

Stating that the hardest part of inflation is behind us, Şimşek said, "Inflation will fall to around 60 percent next month and around 50 percent the following month. We have a tolerance of up to 42 percent for inflation by the end of the year. We are currently at the beginning of the disinflation period," he said.

EMPHASIS ON PERMANENT STRUCTURAL TRANSFORMATION

Highlights from Minister Şimşek's statements:

One of the most important goals of the program is sustainable growth. Today, the contribution of net exports has turned positive, and domestic demand continues at a reasonable level. We are facing a good growth path.

Another important goal is a sustainable current account deficit. We will remove the current account deficit as a source of concern. Structural transformation is needed for it to be permanent. Another issue is the re-establishment of fiscal discipline.

Excluding the earthquake, the ratio of the deficit to national income is only 1.6 percent. If you set aside the expenditures required by the earthquake, there is no problem with fiscal discipline. The deficit itself creates an impulse.

If we reduce the deficit through the fight against inflation, we will have strengthened the hand of the Central Bank.

HISTORIC IMPROVEMENT IN RESERVES

We have reduced currency risk and are increasing the maturity of borrowing. We are facing a historic correction in international reserves. We have almost closed the swap with banks.

Net reserves excluding swaps have risen from minus 61 billion dollars to over plus 18 billion dollars. The improvement in net reserves has reached around 80 billion dollars. We previously achieved this type of improvement in 11 years; this improvement was achieved in one year.

KKM (FX-protected deposit accounts) has fallen below 60 billion dollars. Exits from KKM will accelerate much more in July.

EXTERNAL FINANCING PROBLEM HAS DISAPPEARED

With Turkey's stability and reform program, there has been a dramatic drop in the risk premium. In the last year, the contraction in the risk premium is around 450 basis points; there is a tremendous improvement in the risk premium compared to similar countries.

The problem in accessing external financing has disappeared. The problem of Turkey's access to external financing at reasonable costs has largely disappeared.

A large part of the increase in reserves is explained by the transition from foreign currency to TL due to the confidence of our citizens and companies in the program; more than two-thirds of it is this.

The hardest part of inflation is behind us. We are implementing a strong program that has consistency.

Monetary policy is shaping disinflation with a lag. The construction of monetary policy takes time.

Inflation will fall to around 60 percent next month and around 50 percent the following month. We have a tolerance of up to 42 percent for inflation by the end of the year. We are currently at the beginning of the disinflation period.

"WE CARE ABOUT EXPENDITURE DISCIPLINE IN THE PUBLIC SECTOR"

We care about expenditure discipline in the public sector, and we are reviewing all expenditures. We will close some programs and units.

We will assign our employees to the Revenue Administration to ensure justice in taxation.

We have started the fight against the informal economy; it will not be an action plan, it will be in practice.

Our goal is not to leave any untaxed area, and to ensure justice and efficiency in taxation. The burden will in no way be placed on low-income earners.

We must permanently establish macro-financial stability.

News Source: 12punto