Turkey’s Finance Minister: We will do financial tightening as soon as possible

Mr. Naci AGBAL, Turkey’s Finance Minister has made statements about financial policies Turkey is to follow in the coming period to overcome pending economic issues. Stating that there was a significant synchronization between the monetary policy and the fiscal policy, The minister said “We will do financial tightening as soon as possible” and added they were working on the fiscal tightening required by monetary policies.

The Minister shared following main topics to reveal his opinions about the subject;

Increasing interest rates in the world are leading to the return of capital to the US and Europe, which in return causes funds to “leave emerging markets. At a time the world is entering “a new normal” stage, the most important requirement for Turkey is a strong political power. There is a sense of volatility in the global foreign exchange market in the world in general with more impact on developing countries which affects Turkey as well.

We will create a macro financial framework in line with the new global conditions and take necessary measures within this framework We will establish financial policies to comply with “new normal” in economy policies and we will pursue tight monetary and fiscal policies.

Economy should be managed centrally and if there is a disorganized structure in economy management, coordination should be established. We will enter a new stage in our economic policies in accordance with new global conditions new global requirements, using our flexibilities.

Turkey has double digit inflation and we need to pull it down. It is very important for macroeconomics that we pull inflation to single digit figures.

Turkey needs to grow, we need to grow based on increasing demand for labor and we have the potential for it. We can continue to grow with the right set of macroeconomics.

Tightening in monetary policies will continue. The Central Bank has made a strong connection to the market at this time, clearly in the context of forward-looking policies.

The independence of the CBRT (Turkey’s Central Bank) will continue the same way and the government is committed to this issue. The Central Bank which implements the monetary policy will have institutional tool independence.

Regarding fiscal policies, we have done whatever required. After the elections we will do whatever necessary in two stages that is immediately and in a medium term program. We will use public price adjustments, tax adjustment tools to pull inflationary expectations down.

Therefore, the synchronization we are to establish between the monetary policy and the fiscal policy will reverse the negative expectations. It is important that these steps are related to a specific road map and we will take steps to reinforce the steps we have taken so far after we are over with elections.

In the budget, we will obtain a resource of 15 billion via “restructuring” law. We will resolve permanent increases in expenditures with permanent and balancing public finance measures, and we will not put an additional burden on our citizens.