Türkiye introducing new measures to curb persistent inflation

Public savings, spending discipline in budget, efficiency in public investments 3 main axes of new measures, says finance minister

12:35 - 13/05/2024 Pazartesi
Türkiye's Treasury and Finance Minister Mehmet Simsek
Türkiye's Treasury and Finance Minister Mehmet Simsek

Turkish finance minister on Monday said Türkiye is introducing a series of measures to "discipline public spending" with increasing effectiveness in a bid to tackle persistent inflation.

The most important priority of “the savings and efficiency package in the public sector” is to eliminate the cost of living and reduce inflation to single digits, Türkiye's Treasury and Finance Minister Mehmet Simsek said at a press conference.

Price stability is the most important component of prosperity and sustainable high growth, Simsek stressed.

According to the latest data from TurkStat, Türkiye's annual inflation rate rose to 69.8% in April from 68.5% in March.

The government's medium-term economic program released last September forecasted the year-end inflation rate to come in at 33% this year, 15.2% in 2025, and 8.5% in 2026.

The new measures, unlike previous practices, will increase efficiency in the public sector and provide savings, implement a strong monitoring, auditing, reporting, and sanction model, and cover the entire public, he underlined.

"With fiscal discipline, we will allocate more resources to natural disasters, green and digital transformation. We will ensure that our country borrows at more reasonable costs by reducing the country risk premium, and we will improve intergenerational justice by borrowing less," he explained.

He noted that public savings, spending discipline in the budget, and efficiency in public investments are the three main axes of spending measures.

"We will focus on 8 priority areas in public spending such as vehicles, buildings, public employment, efficiency in administrative structuring, overseas temporary assignment expenses, energy and waste management, communication expenses, and other current expenses," Simsek said.

Within the scope of spending discipline in the budget, the government will cut 10% in goods and services purchase appropriations and 15% in investment appropriations, excluding earthquakes and compulsory expenditures, he said.

Simsek pledged to announce new reforms in public finance in the coming period.

On his part, Turkish Vice President Cevdet Yilmaz said public savings and increased efficiency will reduce the budget deficit, public borrowing and interest burden, and current account deficit.

"In addition to its demand-side contribution, public investments focusing on projects close to completion, irrigation and competitiveness-enhancing infrastructures will also have a strengthening effect on our fight against inflation with supply-side increases," he added.

Recalling that the budget deficit-to-GDP ratio came in at 5.2% last year, much better than the government's expectation of 6.4%, Yilmaz said: "We aim to achieve a similar improvement at the end of this year."

#public spending
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