Turkiye Economy Minister Şimşek: Economic Program is Proving Effective

Hazine ve Maliye Bakanı (Minister of Treasury and Finance) Mehmet Şimşek addressed the importance and success of Turkey’s economic program during the “Istanbul Public-Private Partnership Week (PPP Week)” event in collaboration with the Public-Private Sector Cooperation Research Center and DEİK in Istanbul.

Şimşek highlighted Turkey’s favorable position in the World Bank Logistics Index, ranking 38th globally and surpassing over 90 rising and developing nations. Emphasizing the significance of infrastructure development, he stated, “Progress in physical infrastructure is crucial for Turkey.”

Another crucial aspect for Turkey, according to Şimşek, is digital transformation, considering it an integral part of the overall infrastructure and a key criterion for being prepared for artificial intelligence.

Digital Transformation: A Critical Focus Area

Şimşek stressed the importance of focusing on digital transformation, stating, “Another significant aspect is sustainable energy infrastructure. Climate change is a reality, and investing in sustainable energy infrastructure is crucial in the fight against climate change. Turkey has made progress in this field compared to previous periods, with approximately 55% of our installed capacity coming from renewable energy sources today. While hydroelectric power is essential, solar, wind, and geothermal energy are increasingly gaining importance. Therefore, investments of around $100 billion are expected over the next 10 years.”

Pointing out that developing countries’ total investment needs have increased from $2.5 trillion a decade ago to $4 trillion annually, Şimşek highlighted the substantial benefits of Public-Private Partnerships (PPP) in raising financial resources, sharing risks and opportunities, facilitating information transfer, and attracting direct foreign investment.

Turkiye Investment Gap and PPP Successes

Şimşek informed that Turkey has successfully implemented 249 PPP projects, positioning the country as a leader in this field among other nations. He mentioned an estimated investment gap of $405 billion until 2040, based on current demographic trends and growth.

Discussing the Central Bank’s role in Turkey’s economic program, Şimşek stated, “The program aims to achieve price stability, restore fiscal discipline, reduce the current account deficit, rebalance growth, and implement structural reforms to enhance efficiency and competitiveness. We have already taken necessary steps in monetary policy towards achieving our price stability target, initiating a tightening process. We have also implemented selective credit tightening measures. Supportive fiscal and income policies have been applied, and we will continue with more supportive income and fiscal policies in the future.”

Expressing confidence in the effectiveness of the economic program, Şimşek acknowledged that it is still in the early stages, emphasizing the need for patience and forward-looking determination.

Turkiye Growth Potential

Şimşek dismissed concerns about Turkey’s growth, stating, “Turkey does not have a growth problem. We aim to reduce the current account deficit through a balanced growth path. Turkey, although not as large as China or India, performs at the same level as the best-performing developing markets. This is because Turkey is an entrepreneurial country with relatively positive demographics and strong infrastructure.”

Central Bank Reserves and Future Outlook

Regarding the Central Bank’s reserves, Şimşek noted significant improvement since May of the previous year. Addressing recent pressure on the Turkish lira due to export-oriented calls, he commented, “As elections approach, there are many speculations. Our perspective on the post-election scenario was explained in a recent television program. However, it’s essential to correct the course of monetary policy since current conditions are significantly different from the pre-election period last year. Other steps have been taken as well, leading credit rating agencies to upgrade our outlook. Looking at the market, Turkey’s risk perception is two grades better than its credit rating, and that is genuinely crucial.”

In conclusion, Minister Şimşek underlined the importance of investing in people, developing skills, and acquiring new capabilities amid the rise of artificial intelligence. He also highlighted the necessity for urban transformation in Turkey, particularly in cities like Istanbul, to mitigate earthquake risks, emphasizing the importance of long-term perspectives for such initiatives.

source: prepared by Melisa Beğiç

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