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Will the 25 percent rental limit continue? Mehmet Şimşek answered live.

Will the 25 percent rental limit continue? Mehmet Şimşek answered live.

22.05.2024 17:08

Minister of Treasury and Finance Mehmet Şimşek announced in a live broadcast that the economic stabilization process has commenced. Minister Şimşek highlighted that there is no justification for the 25% rent limit to persist and also addressed criticisms from the International Monetary Fund (IMF), stating, "This program belongs to Turkey alone. We have not had any discussions with international organizations."

Treasury and Finance Minister Mehmet Şimşek stated in a program on TRT News that he believes the 25% rental limit should not continue and it is likely that it will be removed.

Minister Şimşek highlighted the following points in his statements: "The program is working, there is a decrease in domestic demand, net exports are having a positive impact, and there is a balanced growth. Turkey's current account deficit has almost halved, and significant imbalances have been resolved.

The program is successfully addressing fundamental imbalances. There is a larger increase in fund inflows than expected. The decrease in risk premium shows that the program is working. Confidence in the program is strong and continuously growing. A decrease in inflation is expected. In the past two years, inflation has decreased to around 22%. We will support this with performance and strengthen the program. We will implement strong savings measures in the public sector and accelerate structural reforms.

We will support monetary policy through budget discipline and accelerating reforms to increase efficiency. This program has received significant interest both domestically and internationally. We will take steps to strengthen the program, including in the areas of public finance and structural transformation. This program is Turkey's own program. We did not consult with any international organization during its preparation. Last year, we faced a major earthquake disaster, and our priority was to heal the wounds caused by it.

Apart from the earthquake, there has been significant tightening in the budget, and the budget deficit increased due to the earthquake. This year, we will close the budget deficit well below our target. We will prioritize efficiency in energy and digital transformation. Discipline and expenditure control are crucial in areas other than earthquakes. The disinflation program was not favorable last year due to the large budget deficit. The banking sector could have struggled to finance it internally.

For these reasons, we took some measures that were inflationary. We increased VAT and excise tax on fuel. When we released the exchange rate, it had an inflationary effect. When we consider the earthquake, exchange rate effect, tax effect, and expectations together, inflation started to rise. None of these factors exist this year. If we did not buy foreign currency from the market, the dollar could have fallen below 30. There is no reason for the depreciation of the Turkish lira.

We do not expect an increase in VAT. We have significantly addressed the wounds caused by the earthquake. There is a balance in construction costs and the sector. Expectations are improving. There is improvement in inflation expectations. All of these support disinflation. We are determined to reduce inflation and will not hesitate to take necessary measures to reduce it to single digits next year.

We will not step back in fiscal policy or monetary policy. I see no reason for the 25% rental limit to continue, and it is likely that it will be removed. There should be no intervention in credit pricing. Turkey's need for foreign currency is decreasing, and the trade deficit is decreasing. There used to be negative real interest rates for a long time, but that is not the case today. There is a strong inflow of funds to Turkey."

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