Türkiye’s new medium-term program will include updates to macro indicators and public policies, and will cover pledges for robust structural reforms and allocation of resources, a senior official said Friday.
The new economic plan will be unveiled in September and will reflect expectations of the business world, Vice President Cevdet Yılmaz said before a meeting with private sector executives in Istanbul.
"Our new economy program is being prepared with an approach that will have a direct positive impact on the life of our citizens, production and markets within the framework of a certain discipline," Yılmaz said.
"Our biggest expectation from the Medium-Term Program is that it will reduce uncertainties and increase predictability for investors and other actors."
Türkiye’s economic authorities have taken steps since President Recep Tayyip Erdoğan was reelected on May 28, including changing course after two years of monetary easing.
Erdoğan reshuffled his economy team and named Yılmaz as vice president, Mehmet Şimşek, the respected veteran policymaker, as treasury and finance minister and Hafize Gaye Erkan, a former Wall Street banker, as central bank governor.
The overhaul was seen as an initial sign that Ankara would revamp policies centered around monetary stimulus and opt for interest rate hikes to combat stubborn inflation, stabilize the volatility in the Turkish lira and rebuild foreign exchange reserves.
Annual inflation eased to 38.21% in June, in a significant regress from a 24-year high of 85.5% in October last year. Yet, analysts expect it to rise in the rest of the year, due to a decline in the lira and various tax hikes in July.
Yılmaz said the government continues to work "to increase macro-financial stability along with price stability."
Since Erdoğan's reelection, the central bank has hiked its policy rate to 17.5% and pledged further tightening to fight inflation, while the government has introduced tax and fee hikes to ramp up budget income.
The monetary authority lastly increased its one-week repo rate by 250 basis points on Thursday, after a 650 basis-point hike at Erkan's first monetary policy meeting last month. The bank on Thursday promised more tightening and said it would support it with additional measures.
"In the Medium-Term Program, we will update public policies and macro indicators, put forward structural reforms and direct the allocation of resources within this framework," Yılmaz said.
"Our goal in the coming period is to strengthen financial stability in Turkey through monetary policy, as well as fiscal policy and structural reforms,"
Yılmaz stressed the government's intention to implement policies that will boost the competitiveness of the country's economy and measures that will enhance competition.
The government aims at ensuring growth in stability and confidence, an increase in employment and sustainable solutions to the current account deficit, the official said.
He emphasized that their goal is to strengthen Türkiye's financial stability with fiscal policy and structural reforms as well as monetary policy, to grow in stability and confidence, to increase employment and to bring sustainable solutions to the current account deficit.
Türkiye's gross domestic product (GDP) expanded by 5.6% in 2022 and grew 4% in the first quarter of 2023 despite challenges spearheaded by the devastating earthquakes that struck its southeastern region in early February.
"Machinery and equipment investments grew by 8% in the first quarter of 2023 and carried the uninterrupted growth process to the 14th quarter," Yılmaz said.
He stressed the government would continue with result-oriented reform steps to improve the investment environment.
"We will continue to give priority to increasing financing opportunities for exporters and industrialists and domestic national technology investments."