The Minister of Treasury and Finance, Mehmet Şimşek, spoke at the IICEC Conference organized under the theme of Economic Growth and Energy: Shaping the Economy of the Future. Minister Şimşek stated, "If you look at the big picture, disinflation has started and will continue. Our growth potential is still high. Our debt ratio is low." Minister Şimşek's statements are as follows: The importance of supply from friendly countries continues, and this may become even more significant with the new administration in the USA; Turkey may be less affected by this. Global stress due to debt will increase, and the payments many countries make on their debt interest are above those made in critical areas. Turkey still has the opportunity window for becoming rich without aging. Turkey is well positioned among developing countries. We will invest in digital infrastructure. "OUR GROWTH POTENTIAL IS HIGH"We have the potential to enter the group of high-income countries within a year or two. We are approaching the per capita national income of European Union countries. The increase in income emphasizes once again the importance of fighting inflation. We are continuing our program with patience and determination. Our growth potential is still high. Our debt ratio is low. With disinflation, we will encounter much better financial conditions. We are creating fiscal space for reforms. Citizens have complaints about the cost of living; we know the problems, we hear you, of course, there is a slowdown in the short term, but there is no doubt in the long term. By November 2024, the share of renewable energy in production will have risen to 48%, and its share in installed capacity will be 59%; we are also in a good position among G20 countries. In the upcoming period, we expect Turkey to accelerate in the field of renewable energy with serious investments, and we will make regulations that will open the way for the sector. In the upcoming period, the investments of our Ministry of Energy in energy efficiency will also gain momentum. We will increase our nuclear capacity; there is a capacity under construction, which is not sufficient, and we are looking for investments 3-4 times that amount. "A FAIRER INCOME DISTRIBUTION"We support electric vehicles; there was a tremendous surge in 2023, and it will grow even more with foreign investments; Turkey is not lagging behind here. Our carbon emissions are lower than those of peer countries, slightly above the world average; we are a serious industrial country, and there was a decrease in carbon emissions last year; Turkey is on the right track. The stability and reform program is still working; the ultimate goal of the program is sustainable high growth and a fairer income distribution. We are concerned whether it will rise to 2% next year; if oil remains low, our improvement in the current account deficit is not a temporary improvement. In the medium term, with structural transformation, we can move to a current account surplus. The issue of reserves; it was a concern last year, but it has now ceased to be a concern. Net reserves have risen above 50 billion dollars, which is quite a good level, so Turkey has removed the concern about reserves, of course, if we continue the right policies, these reserves will remain, and we will continue. We have reached the adequacy of reserves according to international standards as of December. They say this program works through hot money; there is no such thing; more than two-thirds of our reserve accumulation comes from medium to long-term sources and from portfolio preferences within Turkey. Not all portfolio investments are excessively hot, so clearly, we have neither an implicit nor an explicit exchange rate target; this is my message to the markets. "WE HAVE NO EXCHANGE RATE TARGET, NOR CAN WE"We have no exchange rate target, nor can we; there has been a significant flow of funds this year, we had to buy 110 billion dollars in foreign currency, yet we managed it; managing the flow of funds requires a completely different skill set, and our Central Bank has done a good job in this regard. The exit from KKM is ongoing and will continue. Our country's risk premium has fallen 10-11 times faster compared to similar countries. If the program does not have a counterpart inside and outside, can this risk premium improvement happen? There is a program that has a real counterpart, and we are getting results. The Treasury's external borrowing costs have decreased by 227 basis points, while Turkey's has decreased by 428 basis points; Turkey's borrowing costs have decreased, and so has the real sector's. If the decline in CDS continues at its current level for 5 years, we will save 7 billion dollars annually in external debt interest. There is a serious inflation and cost of living problem in Turkey. One of the main goals of the program is to ensure price stability. "THERE IS A SIGNIFICANT DECREASE IN INFLATION"There was rigidity in service inflation, which will be resolved over time; it has started to be resolved, and 2025 will be much more supportive in this regard. The core goods inflation is 29%, and the inflation of goods including food is below 40%; there is a significant decrease in inflation, and this decrease will continue. If you look at the big picture, disinflation has started and will continue. Of course, we pay attention to market expectations and household expectations. "250 THOUSAND MORE HOUSES WILL COME"Most importantly, supply-side policies. The budget deficit will decrease in 2025, and since the deficit will decrease, it supports this disinflation. There is a tremendous housing mobilization due to the earthquake; 200 thousand houses will be delivered by the end of this year, and another 250 thousand houses will come in the next 1-1.5 years. We will increase housing supply and open the way for our citizens to rent or own homes at a reasonable value. The importance of food in supply-side policies is very significant.
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