Mehmet Şimşek announces with a date: The 25 percent rent cap is being lifted

Minister of Treasury and Finance Mehmet Şimşek made statements regarding the economic agenda during a program he attended on TRT Haber.

Stating that he sees no reason for the 25 percent cap on rent increases to continue, Şimşek noted that there is no ongoing work on this matter.

Key highlights from Minister Şimşek's statements are as follows:

"WE HAVE ENTERED A REBALANCING PROCESS"

First and foremost, we have entered a rebalancing process in the economy. In other words, a number of macroeconomic imbalances had emerged due to the excessive increase in domestic demand. Now, there is a softening there. The impact of net exports has begun to turn positive for the economy. That is, the composition of growth is changing; there is a rebalancing in growth. This also resolves the imbalances that emerged along with it. One of the most important imbalances is the current account deficit. It was around 57 billion dollars in May of last year. A large deficit. This year, as of May, this deficit will have fallen below 30 billion dollars. Therefore, there is a very serious improvement. In other words, there is a halving in Turkey's external deficit. One of the significant imbalances has been resolved within this framework.

If you look at market assessments as of the end of May last year, it was predicted by the markets that the budget deficit, as a ratio to national income, could reach 9-10 percent, especially due to the impact of the earthquake. We kept this at 5.2 percent last year. This is also a significant imbalance, and the budget deficit excluding the earthquake, as a ratio to national income, is only 1.6 percent; this is also significant. Therefore, the program is working in terms of resolving fundamental imbalances.

"THERE IS AN INCREASE IN FUND FLOWS"

There are some indicators that summarize that the program is working. For example, Turkey's risk premium. Turkey's risk premium was over 700 basis points in May of last year. Today, it has fallen below 270. During this period, we have shown a tremendous performance compared to emerging countries. That is, our risk premium has not only fallen, but it has fallen much faster compared to other countries similar to us. The decline in the risk premium is actually an indicator that summarizes that the program is working here. Because this is one of the factors that determines the cost of fund flows to Turkey. There is a much larger increase in fund flows to Turkey than we anticipated. Especially after the local elections, there has been such a serious fund flow and portfolio shift in favor of the Turkish lira in the last 1.5 months that the Central Bank's reserve position, excluding swaps, has shown an improvement of nearly 49 billion dollars.

If we had not purchased foreign currency from the market, the dollar would have fallen below 30, to the 20s. We are accumulating reserves.

News Source: 12punto