A new action plan arrives for the economy
The new economic management in the Presidential Cabinet announced by President Recep Tayyip Erdoğan has become clear.
According to this; Minister of Finance and Finance Mehmet Şimşek, Minister of Labor and Social Security Vedat Işıkhan, Minister of Energy and Natural Resources Alparslan Bayraktar, Minister of Industry and Technology Mehmet Fatih Kacır, Minister of Agriculture and Forestry İbrahim Yumaklı, Minister of Trade Ömer Bolat, Minister of Transport and Infrastructure Abdulkadir Uraloğlu implement the predetermined economic policies.
The first messages that Şimşek gave at the ceremony when he took up the ministry were also evaluated as signals of the strategy to be followed. Stating that transparency, consistency, predictability and compliance with international standards will be the fundamental principles to achieve the goal of increasing social welfare, Şimşek said that they will give priority to macro-financial stability by strengthening quality and capacity institutional at a juncture where global and geopolitical challenges increase tensions.
Şimşek informed that they will start working on the Medium Term Program without wasting time.
THE ECONOMIC ACTION PLAN IS COMING
The AK Party statement entitled “The Right Steps for the Turkish Century” announced before the elections and the Medium-Term Program for the years 2023-2025 also serve as a guideline that includes the priorities and main lines of economic policy to be followed. for the next period. In this context, it is expected that the instruments to be used to achieve the goals, the projects to be implemented and the road map to be followed will be shaped by the new economic management.
It is claimed that the management agenda of the new economy, especially the Ministry of Finance, will include measures to combat inflation, strengthen capital markets and the investment climate, and reduce the current account deficit.
In order to implement a stable and strong economy, a predictable, transparent and effective set of policies with determined political will, the “Economic Action Plan” will be implemented as a roadmap for 5 years.
FIGHT AGAINST INFLATION AND SOCIAL WEALTH
The main theme of the new period will be the fight against inflation. In addition, it aims to protect social welfare during said struggle by increasing the income of low-income people, civil servants, public workers and retirees, especially those with low incomes.
In the medium term, the economic policy tools are expected to be used in a holistic approach to bring inflation below 25 percent by the end of 2023 and back to single digits by the end of 2025 in line with the targets. in the Medium Term Program.
In line with this goal, efforts will be made to avoid food price volatility by strengthening agricultural production, efficiency, and logistics planning. Parallel to the policies to reduce foreign energy dependence, the aim is to reduce the energy costs reflected in homes.
RENT INCREASES
Among the policies will be to avoid the exorbitant increase in rental expenses, which has an important place in the composition of the expenditure of low-income people, and to continue with the social housing projects for it.
“Sustainable growth” will also be one of the main objectives of managing the new economy. In this context, steps are expected to be taken with the objective of reaching a national income size of 1.5 trillion dollars and a per capita income of 16 thousand dollars by the end of 2028, with an average annual growth of 5.5 percent in the 2024 period. -2028.
Structural reforms will also be implemented that will make the increase in total factor productivity demanded by the business world permanent.
Its goal is to increase production capacity and productivity-based growth by paving the way for public and private sector investment.
While it aims to gradually decrease the unemployment rate with the increase in employment, the works will be carried out in accordance with the objective of increasing total employment to 36 million with an additional 6 million jobs and reducing the unemployment rate below 7 percent by 2028. .
CURRENT DEFICIT AND RESERVES
Steps will be taken to reduce the pressure of foreign exchange demand on import prices by reducing the current account deficit. Financial instruments that will increase savings in Turkish lira will be developed and supported.
In line with the investment, employment, production and export objectives for price stability, selective credit practices will be maintained at affordable costs for the real sector.
Taking into account the earthquakes in Kahramanmaraş, which is described as the “disaster of the century”, and the new expenses required by this, it is planned to implement a comprehensive program to increase efficiency and savings in public finances.
Incentives and supports will be simplified and restructured. Its objective will be to strengthen the Treasury reserve by expanding the application of the Single Account of Treasury Entities.
A system will be established that will support the digital transformation in the tax system and based on environmentally friendly green taxation, and tax policies will be carried out on two main axes: growth and social justice.
Fiscal policies that promote the labor and business participation of young people, women and disadvantaged groups will be prioritized, and selective and focused fiscal incentives will be maintained.
Existing taxes will be regulated taking into account the European Union’s Border Carbon Regulation Mechanism and international developments on climate change, so that those with the least carbon emissions are taxed less.
TEAM REBUILDING
The portfolio of real estate included in the scope and privatization program will be evaluated using capital market instruments other than classical privatization methods, and proceeds from public real estate and infrastructure facilities will be shared with investing citizens.
In this context, capital market instruments will come to the fore in privatization practices, state-owned companies will be restructured and prepared for public offering within the framework of corporate governance principles.
A new system for the protection of private sector investments will be implemented in order to reduce bureaucracy and produce quick solutions to problems encountered in the investment process. An “Investment Litigation Authority” will be established to facilitate and expedite private sector investment.
ISTANBUL FINANCIAL CENTER
With the Istanbul Financial Center (IFC) Project, which was inaugurated to make Istanbul the leading center of global finance and international trade, a qualified and multidimensional financial services ecosystem will be created. Steps will be taken for transformation and diversity in the field of finance.
By diversifying non-bank financial elements, the participation of banks in the financial sector will be brought to levels close to international standards.
The Financial Architecture and Infrastructure Strengthening Program will be carried out, and the actions within the scope of the program will be implemented under 7 topics such as capital markets, insurance, participatory financing, sustainable finance, financial technologies, risk management and financial education. .
With capital market actions, emphasis will be placed on diversity of instruments, broadening the base, strengthening the legislative infrastructure, expanding liquidity opportunities and increasing the efficiency of venture capital, and increasing the attractiveness of the capital markets.
Fintech applications in financial services will be expanded and the quality of service will be increased.
‘COMMITTEE’ AND ‘RATING SYSTEM’ IN PARTICIPATION FUNDING
The field of participatory finance will be strengthened, an independent Participatory Finance Law will be prepared within this framework, the participatory finance sector, which is regulated by various laws, will meet under one roof, and the Central Advisory Board will be implemented according to international standards for all sectors under crowdfunding. The “participatory finance qualification” system will be implemented.
The institutional infrastructure of the financial sector will be deepened. In this context, new audit practices and methods will be implemented focused on “supervision technologies”, appropriate to the size, complexity and development of the financial sector.
Participation in environmental, social and governance (ESG) markets will be accelerated to develop sustainable financing opportunities.
In this context, the Development and Investment Bank and the Eximbank will be subject to a strong process of institutional reform, taking into account examples of international best practices.
Within the scope of harmonization with the European Green Agreement, activities will be carried out to formulate strategies, corporate structuring, risk management, reporting and dissemination of public information for the development of green banking practices.
The technological infrastructure will be strengthened to avoid manipulative and distorting market transactions, prioritizing the protection of investors and the development of the capital market.
The Investor Risk Monitoring System will be implemented in order to monitor investor risks in a holistic manner and share them with the players in the sector, with a structure similar to the risk center in banking.
With political and economic stability, predictability and investor-friendly policies, foreign direct investment in high-tech and more productive areas will increase, and the business and investment environment will improve. (AA)