Vice President Yılmaz evaluates the inflation agenda and provides a timeline

Regarding the 25 percent rent increase cap, Cevdet Yılmaz said, "It is valid until the middle of this year; we have time until July. When it approaches, an impact assessment will be conducted, and its pros and cons will be examined. A decision will be made by looking at the course of inflation, the trend in rents, and everything else."

Stating that Fitch Ratings' upgrade of Turkey's credit rating from "B" to "B+" and its outlook from "stable" to "positive" once again shows that Turkey is in a position it does not deserve and that this is a decision made in the right direction, Yılmaz said that they will continue to implement the Medium-Term Program (MTP) with determination, improve the investment environment, and as a result of all this, similar rating upgrades will come from other credit rating agencies.

Yılmaz emphasized that they prioritize the fight against inflation and have set out the policy set for this with the MTP, noting that they have implemented a strong program that includes monetary, fiscal policies, and structural reforms in this regard.

Expressing that the clear decline in annual inflation will be seen in June-July and that they are working specifically on inflation in the food and service groups, Yılmaz said, "We will see clear effects in the second half of 2024. There will be much lower levels in 2025. In 2026, we will reach single-digit inflation again, and we are determined on this matter. We are not saying this just for the sake of it. We have a plan, a program, a policy set, and this is a process that is monitored transparently."

INTERVENTIONS TO PROTECT SMALL INVESTORS

Responding to the question, "There has been a decrease of 14.5 billion in the Central Bank's reserves in the last 10 weeks. This seems to get stuck on the question of 'will there be a policy change after the election?'", Yılmaz explained that they follow a free exchange rate regime, that the Central Bank fulfills its duty to combat speculation, and that it will make its interventions in a way that protects small investors.

Vice President Yılmaz continued as follows:

"If a country is fighting inflation, it means it is already making its own currency more attractive. Therefore, if necessary, our Central Bank is also taking tightening steps as it has done recently. When it sees some speculative things, it can take some steps, even if temporary, and use other instruments. Here, what the small investor needs to know is that when you look at it from a broader perspective, in an environment where inflation is being fought, one should not expect the exchange rate to develop above inflation. There is no such thing; this is contrary to the nature of things. I am not talking about the nominal exchange rate, but the real exchange rate. The increase in inflation will also bring some increase in the exchange rate. Recently, inflation has been slightly above expectations, and this will be reflected in the exchange rate to some extent. This is also a normal thing. This should not be interpreted as there being excessive volatility in the exchange rate."

Stating, "We desire for the composition of our growth to shift towards a structure that is not inflationary, does not increase the current account deficit, and is weighted towards investment and exports," Yılmaz expressed that they aim to make consumption more moderate, increase domestic savings rates, and channel the increasing savings into more productive areas, thus wanting to both ensure a certain rate of growth and contribute to the disinflationary process.

"A DECISION WILL BE MADE BY LOOKING AT THE TREND IN RENTS"

Reminding that the housing issue is very important in terms of social welfare, that they focus especially on primary housing, and that they have announced a major urban transformation program taking into account the disaster risk, Yılmaz said, "In the coming periods, you will see our policies regarding producing more social housing both as the central government and local administrations."

Pointing to the importance of increasing housing supply, Yılmaz said that in addition to issues such as social housing and first-time home ownership, it is necessary to move towards a housing structure that is resilient to disasters and more effective in terms of energy with green transformation.

Vice President Yılmaz drew attention to the fact that the 25 percent rent increase cap was a decision taken to protect and look after tenants during the inflationary period, and noted the following:

"The main thing is, of course, to reduce inflation and eliminate this need. Therefore, when you permanently reduce inflation, there will be no need for this anyway. But the decision on this has not been made yet. It is valid until the middle of this year. We have time until July. When it approaches, an impact assessment will be conducted. Its pros and cons will be examined. A decision will be made by looking at the course of inflation and the trend in rents."

Regarding the houses in the earthquake zone, Yılmaz said, "There are 440 thousand rights holders. As of today, we have delivered 46 thousand of them. So, about a year has passed, and 46 thousand houses have been delivered."

Stating that industry sector representatives in particular are in search of intermediate staff, Yılmaz expressed that a comprehensive study is being carried out to overcome this.

Pointing out that vocational training studies are being prioritized in order to match the skills provided by the education system with the skills demanded by the labor market to eliminate the search for personnel, Yılmaz said that coordinated work with relevant institutions continues in this context.

Pointing out that Turkey has significant potential regarding women's participation in the labor force, Yılmaz said, "A significant part of our labor force deficit will be alleviated by women entering the labor market, especially by receiving education, vocational training, and becoming entrepreneurs. It will have a significant contribution. We are already making serious progress on this issue. I think this will accelerate and increase in the coming period."

Stating that new working models should be included in the system, Yılmaz used the expression, "We need to further popularize new working styles, especially for women and young people."

"THERE HAS BEEN A DETERIORATION IN INCOME DISTRIBUTION ALL OVER THE WORLD"

Upon a question regarding what kind of situation is foreseen for growth to spread to the base and for all citizens to get their share of growth, Vice President Yılmaz noted the following:

"You have to spread the fruits of this growth to society so that it is possible for you to become a truly developed country. Therefore, growth is necessary but not sufficient. I absolutely agree with this. Our growth is good, but on the other hand, we have experienced this. With the pandemic and the post-pandemic process, unfortunately, there has been a deterioration in income distribution all over the world. For the first time, the world has gone backward in the United Nations Sustainable Development Indicators. Let alone moving towards the goals, it has started to go backward. Therefore, these issues are very important. I can say that we achieved a relative improvement in 2023."

Yılmaz pointed out that improvements in employment rates were recorded in 2023 as a reflection of growth in the economy. Yılmaz said, "In 2022, labor's share in national income was 23.6, and in 2023 it rose to 29.1. So, there is an increase of about 5.5 points in labor's share relatively in 2023. This is a very positive development indeed. We have not yet seen the reflection of this on income distribution statistically. These are figures calculated one year later."

STUDIES REGARDING THE EARTHQUAKE ZONE

Upon being asked what stage the studies regarding the earthquakes that occurred on February 6, 2023, centered in Kahramanmaraş, have reached, Yılmaz reminded that the disaster created a massive destruction that directly affected 14 million people and 11 provinces.

Stating that they started working from the first moment to heal the wounds in the earthquake zone, Yılmaz continued as follows:

"According to a calculation we made in the early periods, our country faced a cost of about 104 billion dollars after this earthquake. The heaviest burden of this is last year and this year. It continues at decreasing rates starting from 2025. But when you look at it in terms of the budget, one of the good sides is that this is a one-time expenditure, earthquake expenditures. Therefore, it does not cause structural deterioration in the budget. It brings temporary increases. It temporarily increases your budget deficit. After a while, as the works are completed, your budget deficit returns to its normal level."

Yılmaz provided information regarding the latest status of the houses to be built in the provinces affected by the earthquake, saying, "There are 440 thousand rights holders. As of today, we have delivered 46 thousand of them. So, about a year has passed, and 46 thousand houses have been delivered. We are now planning to deliver 15-20 thousand houses every month, and we estimate that we will reach 200 thousand by the end of the year."

Upon being asked about criticisms that there is a deficiency in financial matters due to expenditures made for the earthquake regarding monetary tightening, Yılmaz explained the following:

"We cannot call it fiscal discipline regarding the earthquake. I mean, healing the wounds of that earthquake is an indispensable thing. You cannot argue about that there. I can only say this. Despite the expenditures on the earthquake, we managed to keep our deficit at a certain rate, this is a good success. When it first started, it was said that it would exceed 10 percent. Remember, there were economists who said our budget deficit would exceed 10 percent a while ago, we were able to keep it at 5.2. I think this is a great success from a fiscal perspective. While doing this, we are absolutely not making any concessions from earthquake expenditures."

STEPS REGARDING MINIMUM WAGE AND RETIREES

Upon a question regarding whether minimum wage earners and retirees have an expectation before the election and whether there will be a new development on this issue, Yılmaz said, "We have taken steps on these issues by using all the means at our disposal as much as possible. In the coming periods, as our economy grows, develops, and our stability continues to bear fruit, we will continue our same approach towards all segments, especially our retirees. Let no one have any doubt about this."

Cevdet Yılmaz pointed out that the budget is not infinite and is limited, and continued as follows:

"Our priority has been retirees and employees. There is absolutely no hesitation about this. You can look at their share in our budget. The share of employees, the transfers we make to retirees to the social security system. But on the other hand, this is a fact, of course, our number of retirees has also reached a quite high figure, we have reached a figure like 16 million. Therefore, the smallest step you take here has a large reflection. A 50 percent increase was made in holiday bonuses, right? The financial reflection of this is 27.5 billion liras. The financial impact of this step taken alone is 27.5 billion liras."

Pointing out that studies will be carried out to collect taxes at an equal rate from people doing the same job, Yılmaz said, "You want to collect taxes at an equal rate from everyone who does the same job. What happens if one pays and the other doesn't? It becomes both a social injustice and unfair competition. I mean, let's say there are two businesses working on the same subject. If one pays its taxes regularly and the other doesn't, their competitive powers are affected and unfair competition occurs. Therefore, when you prevent informality, you also strengthen the competitive environment."

LOCAL ELECTION STATEMENT

Stating that the Presidential and 28th Term Parliamentary General Elections were held with great democratic maturity and high participation, Yılmaz said he believes the local elections on March 31 will be completed in the same way.

Emphasizing that in local elections, the person who will best perform local common services should be elected, Yılmaz also touched upon the fact that the citizen's political preference in the general election may differ in the local election.

Upon being asked about his impressions of his visits to Eastern and Southeastern Anatolia, Yılmaz gave the following response:

"There is truly a climate of peace in Eastern Anatolia and the Southeast. We are people who have reached a certain age, and our lives have truly passed with this terrorism and the damages caused by terrorism. Especially the people of the East and Southeast saw the greatest damage. Our Kurdish citizens living there saw it.

Why? Where there is terrorism, there is no investment. Where there is terrorism, there is no animal husbandry, there is no tourism. Where there is terrorism, qualified people do not come and work. Therefore, that region suffered a great loss socially. Capital migrates to other regions. In an environment where terrorism decreases and is marginalized, I think the people living in the region see the greatest benefit."

Giving details about the studies for tourism, Yılmaz announced that they have set a target of 60 million tourists and 60 billion dollars in revenue in Antalya.

Stating that more than 57 million tourists and more than 54 billion dollars in revenue were obtained in 2023, Yılmaz said that per capita income and overnight stay income have also increased.

Stating that they aim to increase tourism revenue to 100 billion dollars by 2030, Yılmaz noted that they believe this will play an important role in closing the current account deficit.

Emphasizing that they aim for a tourism model that spreads over 12 months, not just sea, sand, and sun tourism, but from cultural tourism to winter tourism and health tourism, Yılmaz added that he believes the coordination between the central government and local administrations will play an important role in the development of tourism.

"HARMONY IS IMPORTANT"

Pointing out that the harmony and coordination between local administrations and the central government are important, Yılmaz said, "If you use what the central government allocates to you in the right direction and well, you solve the problems. But if you cannot use it, the whole society or the people living in that city pay for it. Did Istanbul Metropolitan Municipality Mayor Ekrem İmamoğlu use the resources allocated or given to him by the central government correctly within these 5 years? How will Murat Kurum use these resources if he comes? Look, Mr. İmamoğlu himself gives the best answer to this. How does he give it? He is declaring that he is unsuccessful in a sense. Because he says, 'I couldn't do these things because the central administration didn't give me enough power'."

Stating that he believes that if Murat Kurum is elected, he will reveal a different understanding of municipalism, Yılmaz said, "Kurum says, 'Only Istanbul'. Istanbul's problems, concrete problems, things that people experience in their daily lives are clear. 'I will focus on these,' he says. What are these? Transportation. People will be able to access and reach in a shorter time. 'I have made the preparations for this,' he says. He puts forward his concrete projects. Disaster is one of the most fundamental issues of Istanbul, and Mr. Murat is probably one of the few experts in Turkey on this subject."

"THE ARRIVAL OF FOREIGN INVESTORS TO TURKEY WILL BE MORE IN THE NEAR FUTURE"

Conveying that both he and Treasury and Finance Minister Mehmet Şimşek have meetings with foreign investors regarding the economy, Yılmaz said, "We foresee that the arrival of foreigners to Turkey will be more in the near future."

Noting that foreign investors mostly ask whether economic policies will continue after the election, Yılmaz said, "This is very important, of course. We are a developing country. We need to attract more capital from outside so that we can reach our goals more quickly."

Yılmaz expressed that Turkey has great potential to attract investment and can use this potential with the right policies.

Yılmaz gave the following response to the question regarding the updates and developments in the modernization of the Customs Union Agreement:

"We say that visa exemption should be facilitated for the business world, for students, for researchers. Our negotiations on these issues continue. Our Ministry of Foreign Affairs on one hand, and you know, we have a deputy minister for the European Union and our presidency. The Directorate for EU Affairs. They follow these issues very closely. On the other hand, the Ministry of Trade is following this customs union issue closely with its counterparts.

Some countries use the European Union as an instrument against Turkey for political reasons. That is, they try to implement their own national policies, let's say, through the European Union. This actually harms both the European Union and Turkey-European Union relations. Whereas we have common interests. Europe is our main export market, a large part of our capital movements is with Europe, a significant part of our tourism is with Europe, we have nearly 5 million people living in Europe. Therefore, we have very intense relations."

Providing information about the studies carried out with the Turkish Republic of Northern Cyprus, Yılmaz said, "We are preparing a new financial cooperation program. The one we implemented last year had a size of around 9.5 billion liras. The new one we will make will have a size of around 14 billion according to our initial studies. And there are very critical projects ahead of us."