ISTANBUL — Türkiye is continuing to work on new financial support packages for manufacturers and small and medium-sized enterprises (SMEs), Vice President Cevdet Yılmaz said, as the government maintains its focus on bringing down inflation and reducing financing costs.

Speaking at the Eskişehir Development Platform Economic Consultation Meeting on Thursday, Yılmaz said inflation remains the government’s primary economic policy objective and that authorities are closely monitoring price developments on a weekly basis.

“We are continuously working on new financial packages for our industrialists and SMEs,” Yılmaz said, adding that the government is seeking to create lower financing costs through state support and subsidized lending.

Selective Financial Support

Yılmaz said financing remains one of the most critical issues for the private sector. He noted that as price stability improves and economic risks decline, financing costs should also gradually decrease.

In the meantime, the government is using targeted and selective support measures in areas it considers critical. These include subsidized loans for farmers and tradespeople, while rediscount loans are being offered at rates below 24%, according to Yılmaz.

He emphasized that the government does not apply general market interest rates to these programs, instead using state subsidies to lower financing costs for businesses.

Inflation Remains the Priority

Yılmaz said Türkiye’s inflation rate has continued to decline from levels above 75% in 2024. Annual inflation for core goods fell to 16.8% in July, while services inflation also began to decline, falling below 40% for the first time, he said.

He noted that the Central Bank’s latest forecast puts year-end inflation at 28%, while the government will revise its medium-term economic projections in light of developments in Türkiye and the global economy.

“We are pursuing a comprehensive strategy in the fight against inflation,” Yılmaz said, stressing that monetary policy, fiscal policy and supply-side measures must work together.

Budget and Current Account Deficits Remain Manageable

Yılmaz also said Türkiye’s budget and current account deficits remain at manageable levels.

The budget deficit-to-GDP ratio stood at 2.9% last year, despite earthquake-related expenditures, while the current account deficit fell to 1.9%, down from around 5%-6% several years ago. He said the impact of recent wars and higher energy costs could increase the current account deficit somewhat this year, but it should remain manageable.

Türkiye’s annualized goods exports reached $278 billion as of July, while total exports including services rose to $401 billion, Yılmaz said. Central Bank reserves stood at $178.4 billion as of August 7, while Türkiye’s credit default swap (CDS) premium had fallen to around 220, compared with levels as high as 700 several years ago.

Focus on Food, Energy and Logistics

The government is also prioritizing supply-side measures in food, social housing, energy and logistics to help combat inflation.

Yılmaz said authorities plan to increase investments aimed at boosting food production and supply, particularly irrigation. The government will also monitor food prices on a weekly basis and use an early-warning system to anticipate supply-demand imbalances.

Increasing domestic energy production, strengthening energy independence and reducing logistics costs are also part of the government’s broader strategy to support price stability.

Source: Patronlar Dünyası/ Prepared by: İlayda Gök