Albayrak explains new economic program in Bali

AT THE G20 Finance Ministers and Central Bank Governors Meeting held in Indonesia’s Bali late Thursday, Treasury and Finance Minister Berat Albayrak explained the details of the new economic program that “will increase the confidence of global investors” in Turkey.

THE G20 Finance Ministers and Central Bank Governors Meeting in Indonesia’s Bali was very fruitful for Turkey’s economic diplomacy, Treasury and Finance Minister Berat Albayrak said Thursday.

“During our meetings with the representatives of different financial institutions, investment funds and banks, based in the U.S., Europe and Asia, we shared our New Economic Program [NEP] and policies that will increase the confidence of global investors in our country,” Albayrak said on his social media account.

Albayrak on Sept. 20 announced the NEP as a framework with a vision to battle the existing problems in the Turkish economy, including currency volatility, running inflation and a double-digit deficit, and set targets that are based on Turkey’s macroeconomic realities, hence reassuring market confidence in the Turkish economy.

Albayrak also attended the reception hosted by the Banks Association of Turkey (TBB) in Bali. “We have shared the steps we will take to further strengthen our banking sector with numerous international investors and bankers,” he said.

Moreover, in his “Macroeconomic Outlook and Monetary Policy in Turkey” presentation at the International Monetary Fund (IMF) and the World Bank Group meetings in Bali, Central Bank of the Republic of Turkey (CBRT) Governor Murat Çetinkaya said the central bank will continue to use all available instruments in pursuit of the price stability objective.

“A strong monetary tightening has been delivered to support price stability,” the governor said in his presentation.

Çetinkaya added that rebalancing in the economic activity has become more significant. In September, inflation hit 24.52 percent on a year-on-year basis, up 6.3 percent from the previous month, according to the Turkish Statistical Institute (TurkStat). Earlier in the week, Albayrak announced an all-out program, backed by various sectors, to curb inflation and support businesses as well as consumers amid the running inflation and currency volatility. The Full-Scale Fight against Inflation program offers price discounts in the retail sector, including food and textiles, no increase in electricity and gas bills, and lowering interest rates for bank loans. As noted in the NEP, Turkey’s inflation rate target for this year is 20.8 percent. The target for next year is 15.9 percent, 9.8 percent for 2020 and 6 percent for 2021.

“Deteriorating in pricing behavior poses upside risks on the inflation outlook, despite weaker domestic demand conditions,” Çetinkaya said in his presentation, adding that external demand has maintained its strength, while the slowdown in domestic demand accelerated. The Turkish lira has lost over 37 percent in value against the U.S. dollar since the beginning of the year. In an attempt to halt the lira’s slide, the central bank delivered a 6.25 percentage point rate hike last month.