09.02.2025 08:40
The Minister of Treasury and Finance, Mehmet Şimşek, stated in a live broadcast, "Our citizens are right to complain about the high cost of living. Inflation is like an unjust tax. It particularly affects those with fixed and low incomes. Inflation is the greatest evil. We must fight against inflation. Our citizens should be assured that we are in pursuit of a comprehensive solution."
The Minister of Treasury and Finance, Mehmet Şimşek, answered the questions of journalists Erdoğan Aktaş and Cansu Canan Özgen regarding current issues on tv100.
Minister Şimşek stated that he finds the complaints of citizens about the high cost of living justified, saying, "Inflation is like an unfair tax. It particularly affects fixed and low-income individuals. Inflation is the greatest evil. We must fight inflation. Our citizens should be assured that we are in pursuit of a fundamental solution."
Key points from Minister Şimşek's statements are as follows: "The inflation rate of 5% in the first month of the year has brought about some discussions. This inflation in January is the lowest inflation rate for January in the last 4 years. An inflation rate of around 3.5-4% was expected. There are figures here that can be considered one-off. The Turkish Statistical Institute (TÜİK) changed the basket weights here, leading to an additional inflation. Additionally, there had been no changes in examination fees in healthcare for a few years, and the changes here had a 0.6% effect. The effect of the municipalities' increase in tap water prices is 0.4 points. Considering all these, there is no change in the decrease of inflation in the main target. In other words, we expect inflation, which was 65% at the end of 2023, to decrease to 44% last year and 24% this year. The decrease in inflation should not be perceived as a decrease in prices but should be read as a slowdown in the rate of price increases. When looking at basic goods, inflation is 24%, and if you include food, the goods inflation is 33.6%. The high service inflation is notable here. Generally, in all countries, service inflation decreases with a delay because past inflation is always taken as a basis.
"WE WILL ENTER INTO A SERIOUS HOUSING MOBILIZATION"
The high cost of living is currently the most important economic problem facing Turkey. Approximately 82.7% of our population lives in cities. I believe the most important component of the high cost of living is rents. The homeownership rate is around 56%. In recent years, due to the rapid increase in housing prices and rents, what our citizens mean by the high cost of living is rent. We are in a serious effort to increase housing supply. On one hand, there is construction work in the earthquake zone. Apart from that, we are providing significant support from the budget for social housing, on-site transformation, urban transformation, and all these areas. I believe that in a few years, we will enter into a serious social housing mobilization.
"SUBSIDY IN ELECTRICITY IS 60%, NATURAL GAS IS 63%"
Energy is another important component of inflation. Currently, we are providing significant subsidies as a state in energy. The subsidy in electricity is around 60%, and in natural gas, it is around 63%. On average, if the electricity consumed by our citizens costs us 100 lira, we sell it for 40 lira. We sell natural gas for 37 lira, and the difference is covered by the treasury. We are working on all these processes. Turkey is fighting the high cost of living from the supply side with energy, food, and housing supply. This year, the ratio of public expenditures and the budget deficit to national income will decrease, which will also pull inflation down.
"OUR CITIZENS ARE JUSTIFIED IN COMPLAINING ABOUT THE HIGH COST OF LIVING"
Our citizens are justified in complaining about the high cost of living. Inflation is like an unfair tax. It particularly affects fixed and low-income individuals. Inflation is the greatest evil. We must fight inflation. Our citizens should be assured that we are in pursuit of a fundamental solution. The struggle takes time all over the world. After the pandemic, an increase in inflation was also observed in Europe and America. It took more than 3 years for them to reduce inflation, which rose to 9-10%, down to 2-3%. The decrease in inflation will continue.
"THE SAVINGS MEASURES ANNOUNCED HAVE YIELDED SERIOUS RESULTS"
Contrary to the incoming criticisms, serious savings are being made in the public sector as well. Let's go back to the period between 2013-2023. The targeted expenditure, which was set at 100 lira before our program, ended up being 109 lira, which is the average for 10 years. The public expenditure projected at 100 lira in 2024 was realized at 97 lira. We established spending discipline, made savings, and did not allow any excess beyond the budget. The savings measures we announced and implemented have yielded serious results, and we will continue this.
"THIS YEAR, THE CURRENT ACCOUNT DEFICIT WILL WIDEN TO SOME EXTENT"
When I say that our economic program is working, some groups become uncomfortable. Let's look together at whether the program is working or not. Before the program, especially due to the effects of the earthquake, in 2023... If you go to May and June of this year, the market expects a budget deficit of around 10%. This would be a very high deficit. Turkey could not manage this. We reduced this deficit to 4.9%. In other words, we brought it below the market expectation. This year, we will also reduce the budget deficit to around 3%. Another issue is Turkey's current account deficit. When we go to May 2023, our deficit is 55 billion dollars. The deficit before the program was around 5.5% of our national income, but now it is 0.7%. This year, the current account deficit will widen to some extent, but for us, these figures are already manageable.
"INFORMALITY IS ONE OF TURKEY'S BIGGEST PROBLEMS"
Informality is one of Turkey's biggest problems. This is not just a matter of revenue loss. Instead of increasing tax rates in Turkey, we want to reduce the budget deficit by bringing informal businesses into the fold. I want to declare that by 2025, there will be no taxpayer whose door we will not knock on. The most important feature of this period is that we will be constantly in the field. We are conducting our inspections without regard to scale. We started this in 2024. We conducted 1.2 million inspections. We are starting to see results. This year, we want to multiply this. We will especially close some units in the Ministry of Finance and put our personnel through training courses to use them in the field. We will set up tents, so to speak, at the entrances and exits of all organized industrial zones, markets, and industries. We see informalities in every sector without exception.