A senior government official Saturday said the robust trend in foreign arrivals and tourism revenues would help curb Türkiye’s chronic current account deficit, a day after official data showed the number of tourists hit record in July.

Some 7.15 million foreigners arrived in Türkiye last month, the Culture and Tourism Ministry said Friday, surging 7.25% from a year earlier. It marked an all-time high for July and brought the overall figure for the first seven months to nearly 26.77 million, a 16.2% year-over-year jump.

"Tourism is booming! Türkiye welcomes a remarkable 7.1 million foreign visitors in one month, marking the best July in history!" said Mehmet Şimşek, treasury and finance minister.

Şimşek suggested a slowdown in consumer loans, coupled with a notable surge in tourism revenue, would back the government’s bid to relieve the current account deficit and support the Turkish lira.

The foreign arrivals compared with 6.66 million foreign visitors in July 2022. Visitors from Germany, Russia and Britain topped the list of foreigners who visited Türkiye in July, according to the official data.

Combined with over 3 million people of Turkish origin living abroad, the arrivals reached about 30.09 million, surpassing the record of 26.5 million in 2019, dubbed the golden year for the country's tourism.

Tourism is a critical source of revenue for Türkiye as President Recep Tayyip Erdoğan and his government focus on reducing the current account deficit to tackle stubborn inflation.

The current account in June registered a surplus for the first time in almost two years, driven partly by robust tourism and lower energy bills.

The balance swung from a $7.84 billion deficit in May to a surplus of $674 million in June, according to the central bank data. It marked the first surplus since October 2021.

"Türkiye’s current account deficit is expected to shrink significantly (from a 12-month rolling deficit of $56 billion in June to around $40 billion in December) thanks to a slowdown in consumer loan growth and a sharp rise in tourism revenues," Şimşek wrote on social media platform X, formerly known as Twitter.

"This is supportive of a more stable Lira."

In 2022, Türkiye’s current account deficit was at nearly $48.77 billion.

The balance was expected to improve on seasonal factors, including a lower energy import bill, high tourism income, and monetary tightening that started after President Recep Tayyip Erdoğan secured another term after the May elections.

The lira rallied after the central bank shocked the market on Thursday by lifting its key policy rate by 750 basis points to 25% – three times the size of the expected move.

It marked another step toward abandoning ultra-loose monetary policy in the government’s post-election policy reversal to address rebounding inflation.

Erdoğan appointed Şimşek and picked as central bank governor former Wall Street banker Hafize Gaye Erkan – the first woman to run the monetary authority.

Earlier rate cuts had been accompanied by a steep fall in the Turkish lira and soaring inflation, which leaped to a 25-year high above 85% last year but subsequently eased to as low as 38.21% in June.

It rose again to nearly 48% last month because of the lira’s decline and various tax hikes. Officials have acknowledged it would rise further toward the year-end.

Erkan last month said the impact of the monetary tightening cycle would result in an improvement in the current account in the second half of 2023.

Aside from the combined 1,650 basis points in monetary tightening since June, there are other signs of lasting change.

Authorities have raised taxes to limit budget deficits, cooled domestic demand, begun rolling back a depreciation-protected deposit scheme, and raised foreign exchange reserves by $20 billion to head off any possible current account deficit crisis.

Türkiye’s top officials will publish a comprehensive economic program, which they say will reduce uncertainties, next month.

Vice President Cevdet Yılmaz earlier this month said the new medium-term program will detail a transition to increased economic and financial predictability and include three-year macro forecasts. The investor roadshow will also accelerate, he added.

Şimşek will kick off the investor roadshow on Sept. 19 at Goldman Sachs headquarters in New York, Reuters reported on Friday.

After meetings in New York and at the United Nations – which Erdoğan is also expected to attend – Şimşek listed plans for trips to London and an International Monetary Fund (IMF) event in Morocco, as well as other meetings in Japan, Singapore and Hong Kong by the end of the year.