ANKARA: Turkey will rein in public spending and boost efficiency under a savings plan announced on Monday, launching only essential state investment projects in a fresh move to build confidence in an economic tightening programme.
The steps, unveiled by Vice President Cevdet Yilmaz and Finance Minister Mehmet Simsek, come as Turkey returns to more orthodox policies, seeking to boost fiscal discipline and price stability after years of turmoil that fuelled soaring inflation.
Annual inflation climbed to 69.8% in April and is expected to peak at 75-76% in May before falling to 38% at year-end, according to the central bank forecast in its quarterly inflation report last week.
Under a policy U-turn since Simsek took office last year, the central bank has already pursued an aggressive rate hike cycle, raising its policy interest rate by 4,150 basis points.
In the latest move, a package of state savings measures, Simsek said public institutions’ new vehicle purchases and rentals, as well their purchase and construction of new buildings, would be paused for three years.
“We want to strengthen the economic foundations of our country by ensuring fiscal discipline,” Simsek told reporters.
“Directing investments to effective areas will be a critical element in this package. We will accelerate structural reforms and make many reforms in public finances.”
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