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Minister: Turkey aims to decrease inflation by increasing production, export

13 February 2022 13:27 (UTC+04:00)
Minister: Turkey aims to decrease inflation by increasing production, export

By Trend

Minister of Treasury and Finance Nureddin Nebati revealed Turkey's new economic package on Saturday, saying the country aims to decrease inflation by increasing production and export, Trend reports citing Daily Sabah.

Nebati said Turkey will face the steps that will trigger inflation and take measures regarding inflation "together."

Speaking at the Turkish Economy Model New Steps and Inflation Measures Promotion meeting, Nebati announced new measures aimed at countering price increases and getting households to bring gold holdings into the financial system.

The new package includes incentives for exports and production, with a selective financing package via the Credit Guarantee Fund (KGF), which is designed to stimulate the economy by guaranteeing loans to small- and medium-sized (SME) companies. The new package will come into effect starting from March 1.

“Day by day, the rate and weight of the deposit has turned in favor of the exchanged currency. The amount in the deposit protection account has exceeded $10 billion,” Nebati said.

Explaining the measures regarding gold, Nebati said: "This model will bring savings from under pillows into the financial system. It will ensure that domestic savings are centered instead of foreign savings in financing growth. It will increase the attractiveness of Turkish lira savings."

"Incorporating these savings into the financial system will both open a new door of income for our citizens and support the growth of our country. We are starting the work that will involve more than 1,500 jewelers in 2022, at least one in each province, as of March 1," said Nebati, adding that citizens can safely deliver their physical savings to jewelers and banks and get them back if they demand.

Addressing the publicity meeting of the new scheme in Istanbul, Treasury and Finance Minister Nureddin Nebati said that 10,000 jewelers will have joined the gold delivery points by the end of this year.

With the gold conversion deposit account, citizens will make a risk-free income, he added.

"Citizens can easily and safely deliver their gold holdings to the financial system through jewelers and banks," Nebati said.

The gold brought to the financial system as part of the new plan can be physically taken back if requested, he also said.

“We will create a guaranteed volume of 60 billion Turkish liras. We will pave the way for all sectors ... We are setting out with a high-tech, export-oriented understanding in every sense,” said Nebati, giving the signal of an economy that is proactive rather than reactive, focused on production rather than consumption.

“While Turkey was growing, the current account deficit decreased. From now on we are entering a period where Turkey's growth will be talked about,” he added.

Nebati said that they distributed the investment support package to SMEs and non-SME areas, with a maximum of a 24-month grace period and a maximum maturity of 96 months for 25 billion lira support and investment loans. He also underlined that necessary steps will be taken to combat inflation.

“Electricity prices are still negative in real terms in Turkey. Natural gas prices are the same. In real terms, it is still negative in Turkey. This means that we, as Turkey and the public finance sector, are still seriously continuing suspensions. Those who complain about the rise in electricity prices should know that electricity and natural gas prices in Turkey are below real prices. Public finances are responsible for four-fifths of the natural gas we buy, and electricity prices are the same,” said Nebati, pointing out that the whole world is dealing with soaring electricity, natural gas and commodity prices.

“We are an energy importer and what needs to be done in a situation (like this) that affects the world is nothing more than waiting for the suspensions that the country has placed on them to be appreciated,” he added.

Following the minister's speech, President Recep Tayyip Erdogan announced that Turkey will reduce the value-added tax on all food products from 8% to 1%, highlighting that the tax reduction is an important gain in the country's fight against inflation.

"Our nation will not be crushed under inflation," he said.

Erdogan added that the foreign exchange fluctuations do not reflect the reality of the country’s economy.

"We will overcome inflation altogether," the president said. "We will make sure inflation will drop down to single digits in 2023," he added.

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