Minister of Treasury and Finance says Turkey has left the worst of inflation, behind

Minister of Treasury and Finance Şimşek has made a speech at the High Advisory Council meeting of the Turkish Industry and Business Association (TÜSİAD). The Minister has shared the following headlines;

No Issues with Fiscal Discipline: Structural reforms need to become permanent.

Current Account Deficit: The current account deficit-to-GDP ratio will fall below 2.5% with the data to be announced tomorrow.

Reduced Currency Risk: We have reduced currency risk and extended the maturity of borrowing.

Strengthening Public Balance Sheet: We will position the public balance sheet strongly again.

Bank Swaps Almost Closed: We have almost closed swaps with banks. Net reserves, excluding swaps, have exceeded $18 billion.

Dramatic Drop in Risk Premium: Turkey has seen a dramatic drop in risk premium with its stability and reform program. Over the past year, the contraction in risk premium is around 450 basis points, with significant improvement compared to similar countries.

Accelerated Exit from KKM (Currency Protected Deposits) in July: KKM has dropped below $60 billion, and the exit from KKM will accelerate significantly in July.

Access to External Funding Improved: The issue of Turkey’s access to external funding at reasonable costs has been largely resolved.

Increased Long-Term Funding for Banks: Since the end of 2017, our banks’ access to long-term funding has increased dramatically.

Reserves Increase Not Due to Hot Money: The increase in reserves is not due to hot money but because citizens and companies are converting from foreign currency to TL.

Worst of Inflation Behind Us: The worst of inflation is behind us. Rebuilding monetary policy takes time.

Beginning of Disinflation Period: We are at the beginning of the disinflation period. The worst is behind us, the program is working, and we will succeed.

Inflation Could Drop to 60% in July: Next month, inflation is likely to drop to around 60%, and we have tolerance for inflation to go down to 42% by the end of the year.

Price Stability Needed for Sustainable Growth: The burden of the program should be shared fairly by everyone. Price stability is necessary for sustainable high growth.

Shutting Down Certain Public Programs and Units: We value spending discipline in the public sector and are reviewing all expenditures, and we will shut down certain programs and units.

National Income to Increase Strongly: Thanks to reforms, our national income will increase much more strongly.