Mahfi Eğilmez claims 'serious tax hikes' are coming in the near future! 'We started with bridge toll hikes, but...'

Former Treasury Undersecretary Dr. Mahfi Eğilmez gave a presentation on Turkey's economic indicators at the "Sustainable Future in Exports" meetings held with Garanti BBVA.

"VERY SERIOUS TAX HIKES ARE COMING"

Stating that it will not be easy for the Treasury to finance the cash deficit that reached 807 billion liras in the first 4 months of 2024, Eğilmez recalled that there was a cash deficit of 670 billion in 2023, adding, "It is not easy to finance these. We started with bridge toll hikes, but this will not end here. In the coming period, we will most likely see very serious tax increases."

According to Mehtap Özcan Ertürk from Sözcü, Eğilmez stated that the 'interest rate is the cause, inflation is the result' thesis put forward in September 2021 dragged the country into a disaster, saying, "At that time, inflation was 19 percent and interest rates were 19 percent. If we had raised the interest rate to 22 percent back then, we would have no problems today. On the contrary, the policy rate was lowered to 8.5 percent and we experienced such a disaster; now we are trying to solve this."

MID-YEAR HIKE FOR MINIMUM WAGE: THE ONLY WAY OUT IS TO SOLVE INFLATION

Regarding the expectation of a mid-year hike for the minimum wage, Eğilmez said the following:

"They raise the minimum wage, then inflation rises, then another raise, then more inflation; we cannot get out of this vicious cycle. In economics, we call this a wage-price spiral; the only way out of this is to solve inflation. Getting out of 70 percent inflation does not happen with fanfare; unfortunately, many companies will go bankrupt. We have reached a point where we will pay a heavy price to get out of this."

EMPHASIS ON 'RULE OF LAW'

Emphasizing that even if the interest rate is set correctly, it is not a tool capable of saving a country on its own, Eğilmez stated, "You must definitely add structural reforms to it; you need to fix the rule of law and democracy... If you do not do these, there is no possibility of an exit."

EXCHANGE RATE COMMENT: IT DOES NOT LOOK LIKE IT WILL GO UP FROM HERE

Dr. Mahfi Eğilmez gave the following response to a question regarding expectations for the exchange rate:

"When we look at the indicators, if the trend continues like this, the exchange rate does not look like it will increase much. Of course, Turkey is a country of surprises. But if it continues with this outlook, it seems as if the exchange rate will not go up from here, nor will it go down. It seems like it will stay here in the 30s. Of course, exporters are very angry about this, and rightly so. We may not see it reach 40 towards the end of the year; we may stay around 32."

News Source: 12punto