A confession-like statement from Şimşek: We have almost reached the level desired by the IMF

Treasury and Finance Minister Mehmet Şimşek answered questions during a live broadcast on Habertürk TV.

Contrary to the view that "we are not dependent on the IMF," which the AKP has constantly used to gain political capital during election campaigns, Şimşek said, "We have almost reached the level desired by the IMF."

On the other hand, arguing that the minimum wage in Turkey is not low, Şimşek said, "Compare it with Bulgaria and Hungary in Europe. Excluding Poland, we have the highest minimum wage among developing countries. The minimum wage in Turkey is not low."

Making assessments regarding Turkey's removal from the FATF's grey list, Şimşek stated, "The most important issue in exiting the grey list was effectiveness in implementation. It is easy to get on the grey list, but difficult to get off. They just added Monaco to this list. There are countries that are members of the European Union but cannot get off this list, such as Bulgaria... This is a team effort."

Highlights from Şimşek's statements are as follows:

I have discussed this issue with all the leading Finance ministers of the West. We even wrote a letter to the OECD.

The main factor that kept us on the list was effectiveness in implementation. We achieved this through teamwork. Of course, our citizens operating abroad know very well the consequences of being on this list. Turkey's removal from this list is very important both for our country's reputation and for confidence in the financial system.

"RESOURCE INFLOW HAS BEEN VERY STRONG IN RECENT MONTHS"

Resource inflow has been very strong in recent months. We are currently dealing with how to manage this resource inflow. We are printing TL in exchange for the incoming resources. That was threatening the disinflation process. It reached around 78 billion dollars. This is unprecedented in Turkish financial history. A significant portion of this is the TL preference of our citizens who are deposit holders in the country. A portion is also external resources.

We have almost reached the level desired by the IMF.

The essential thing is that we have significantly reduced swaps with domestic banks. We are closing the swaps we received from banks as their maturities expire.

While our reserves had dropped to around -60 billion dollars at the end of March, they have now risen to around 12 billion dollars.

Inflation is still relatively high in Turkey. As we lower inflation, the fluctuation in the exchange rate on a nominal basis has decreased. Our main goal is to ensure stability on a nominal basis by permanently lowering inflation, but it is still too early for that.

"GREECE SUPPORTS US"

As I said, the fund flow is extremely strong. This will reflect positively. Secondly, confidence in the financial system is very important.

We went through a process where many representatives came to Turkey for on-site inspections. I told them: Whether Turkey gets off the list or not, we will make the fight against the financing of terrorism a priority. We will fight it in the strongest way possible. Indeed, Turkey was removed from the list unanimously. There was not a single country that objected. Even the representative of our neighbor Greece came and said, "We strongly support you."

We are explaining the program to many segments both domestically and abroad. While doing this, we created a simple diagram.

The starting point is rule-based rational policies that comply with international norms. This brings investor confidence with it. It increases confidence in Turkish Lira funds from both domestic and foreign sources.

This brings balance and stability to the real exchange rate. This, in turn, brings disinflation. At the core of this program is the elimination of imbalances. At this time last year, Turkey had imbalances that had accumulated for one reason or another. The 12-month current account deficit was 57 billion dollars.

Its ratio to national income was around 6 percent. This year, it will drop to 2–2.5 percent.

"THE COST OF EYT IS 724 BILLION TL"

Do not underestimate it; last year, under the populist push of the opposition, EYT (Retirement at Age) was implemented during the election process. Its annual cost this year is 724 billion TL. We are talking about a figure close to 2 percent of the national income.

The average deficit under AKP governments has been 4 percent. We want to pull this below that this year. We also want to pull it below 3 percent in the coming period.

Next year, we will pull the budget deficit below 3 percent relative to national income. However, we still have a long way to go.

"CITIZENS ARE FEELING THE DROP IN INFLATION"

Our citizens will start to feel the drop in inflation. Actually, they are feeling it. We have provided employment to an average of 690 thousand citizens every year. Without this, there is no prosperity in the economy. When you look at May, you might say inflation has risen; it is 75.5 percent inflation. But that is 12-month inflation. The market says inflation will drop to 20 percent within 24 months. As for us, the Central Bank says at worst it will be 38, but there is a path up to 42 by the end of this year. The important thing is that it drops to around 40 by the end of this year.

"WE WILL NOT GIVE CREDIT TO THE POPULIST RHETORIC OF THE OPPOSITION"

The opposition may have populist rhetoric, but we look at all the balances. We will not give credit to the populist rhetoric of the opposition. We have only one goal: an increase in prosperity and the fair distribution of that prosperity. We will be at a different point in terms of the budget next year. We will fight against segments that refrain from paying taxes even though they earn money.

"THE MINIMUM WAGE IN TURKEY IS NOT LOW"

In the last 20 years, we have increased the minimum wage in Turkey by 5.5 percent in real terms. Turkey's real growth is 5.4 percent. There is a significant increase in dollar terms during the AKP period in the minimum wage, which remained around 100 dollars in the 90s.

The minimum wage increase is 49 percent. Inflation in the first 6 months will be around 20 percent. At the end of the year, the Central Bank's upper band is 42 percent. Even if it stays like this, it corresponds to a minimum wage equivalent that is higher than growth.

Look at the countries in Asia, Indonesia, the Philippines, Thailand, and then compare it with Latin America, Brazil, Chile, Colombia, and in Europe, Bulgaria, Hungary. Excluding Poland, we have the highest minimum wage among developing countries. The minimum wage in Turkey is not low.