Türkiye's newly appointed economy chief on Sunday said macro-financial stability would be the top priority, stressing "vital importance" to bring inflation down to single digits, increasing predictability and accelerating structural transformation.
Mehmet Şimşek was named treasury and finance minister on Saturday, in what is seen as the most prominent appointment in a renewed Cabinet announced by President Recep Tayyip Erdoğan for his new five-year term.
Şimşek, 56, was highly regarded by investors when he served as finance minister between 2009 and 2015 and deputy prime minister in charge of the economy until 2018.
Analysts suggest his appointment could signal a departure from economic policies centered around low-interest rates despite high inflation.
Şimşek said Türkiye has no choice but to return to "rational ground" to ensure predictability in the economy and stressed the primary goal of the new government will be to increase social welfare.
"Transparency, consistency, predictability and compliance with international norms will be our basic principles in achieving this goal," Şimşek told a handover ceremony in the capital Ankara alongside his predecessor Nureddin Nebati.
"Türkiye has no other option than to return to a rational ground. A rules-based, predictable Turkish economy will be the key to achieving the desired prosperity," he said.
Micro-financial stability
Şimşek emphasized that macro-financial stability would be a priority in an environment of increasing global challenges and geopolitical tensions.
"We will start our medium-term financial studies without wasting time," he said.
He stressed the importance of lowering inflation to single digits, increasing predictability and accelerating the structural transformation.
"It is vital for our country to reduce inflation to single digits again in the medium term, to increase predictability in all areas, and to speed up the structural transformation which will reduce the current account deficit," Şimşek said.
"We will carry out our work in coordination with the relevant ministries within the framework of these priorities."
The government's economic program since 2021 stressed monetary stimulus and targeted credit to boost economic growth, exports and investments.
Fiscal discipline, price stability
Erdoğan has repeatedly stressed the government's determination to safeguard households against high prices, aiming to bring the inflation rate down to single digits.
Türkiye's annual inflation hit a 24-year peak last year before moderating significantly in the previous six months.
It lastly eased to an annual 43.68% in April, almost halving from 85.51% in October.
"Establishing fiscal discipline and ensuring price stability for sustainable high growth will be our main goals," Şimşek said.
Fiscal policies and structural reforms will support Türkiye's central bank to help lower inflation, he noted.
In line with the government's approach, the Central Bank of the Republic of Türkiye (CBRT) has aggressively reduced interest rates to ease borrowing costs for businesses and individuals and encourage spending.
The policy rate, known as the one-week repo rate, was cut from 19% in mid-2021 to 9% by early 2023.
The monetary authority last cut the benchmark policy rate by another 50 basis points to provide stimulus after the catastrophic Feb. 6 earthquakes that struck the southeastern region, killed more than 50,000 people and caused extensive destruction across 11 provinces.
For his part, Nebati said in the last five years, they struggled to overcome the challenges faced due to global and regional developments and to ensure that a domestic and indigenous production economy is gradually strengthened.
"I fully believe that our minister (Şimşek) will be successful in the new era," Nebati said.
New names
Prior to political roles, Şimşek worked as an economist at the U.S. Embassy in Ankara and later at Merrill Lynch. He is known for his pragmatic approach and has advocated for economic reforms to promote growth, attract foreign investment, and ensure fiscal discipline.
Alongside Şimşek, Erdoğan named Cevdet Yılmaz, an orthodox economic manager, as vice president.
Yılmaz previously served as minister of development, deputy chairman of the ruling Justice and Development Party's (AK Party) economic affairs and deputy prime minister in charge of the economy.
Yılmaz, 56, has been the chairman of the Turkish Parliament's Planning and Budget Commission since November 2020.
Among others, Erdoğan named Ömer Bolat as the trade minister, Alparslan Bayraktar as the energy and natural resources minister, Vedat Işıkhan as the labor and social security minister and Abdulkadir Uraloğlu as transport and infrastructure minister.
Mehmet Özhaseki has been appointed as environment, urbanization and climate change minister, Mehmet Fatih Kacır as industry and technology minister, while Mehmet Nuri Ersoy retained his post as a culture and tourism minister.