What is the PMP, what is the content of the Medium Term Program?

The three-year Medium Term Program (MTP) has been announced, covering the period 2024-2026, which includes economic objectives and policies. The OVP includes forecasts such as growth, inflation, national income, unemployment, and dollar/TL level for 2023, 2024, 2025, and 2026.

WHAT IS OVP?

The Medium Term Program (MTP) is a three-year program that determines the economic, social and environmental objectives of the Republic of Turkey and establishes the policies to be followed to achieve these objectives.

The main objective of the MPP is to ensure the sustainable and inclusive growth of the Turkish economy. In this direction, the OVP has set the following objectives:

Guarantee and sustain economic growth

Bring inflation down to single digits

increase in employment

reduce poverty

Increase access to education and health services

Protect the environment

WHAT IS THE CONTENT OF THE MEDIUM-TERM PROGRAM?

The Medium Term Program (PMP) has been announced, which includes the economic objectives for the next three years. Its content is as follows…

INFLATION AND GROWTH FORECAST

According to the OVP, inflation was estimated at 65 percent for 2023, 33 percent for 2024, 15.2 percent for 2025, and 8.5 percent for 2026.

The MTP growth forecast was 4.4 percent for 2023, 4 percent for 2024, 4.5 percent for 2025, and 5 percent for 2026.

TAX REVENUE AND ESTIMATE OF THE BUDGET DEFICIT

Tax revenue was estimated at TL 4 trillion 270 billion by 2023, TL 7 trillion 407 billion by 2024, TL 9 trillion 523 billion by 2025, and TL 11 trillion 349 billion by 2026.

The budget deficit was estimated at TL 1.6 trillion for 2023, TL 2.65 trillion for 2024, TL 1.82 trillion for 2025, and TL 1.82 trillion for 2026.

The unemployment forecast was 10.1 percent for 2023, 10.3 percent for 2024, 9.9 percent for 2025, and 9.3 percent for 2026.

DOLLAR/TL FORECAST

In the PMP, the TL Gross Domestic Product (GYSH) targets were announced as TL 25 trillion 483 billion by 2023, TL 41 trillion 159 billion by 2024, TL 52 trillion 942 billion by 2025 and TL 62 trillion. 997 billion TL by 2026.

The Gross Domestic Product (GDP) is projected to be 1 trillion 67 billion dollars by 2023. The goal is for GDP to be 1 trillion 119 billion dollars in 2024, 1 trillion dollars 2025 in 2025 and 1 trillion 318 billion dollars in 2026.

Thus, according to the OVP, estimates of the average annual dollar/TL rate have also emerged. The average annual dollar/TL rate is expected to be 23.88 by 2023, 36.78 by 2024 with a 54 percent annual increase, 43.93 by 2025 with a 19.4 percent annual increase, and 47, 79 by 2026 with an annual increase of 8.8 percent.

When the average exchange rate is calculated to be 21.59 in 2023, the year-end dollar/TL exchange rate needed to reach 23.88 in the rest of the year is expected to be 30.40.

In addition, it is expected that the per capita income this year will be 12 thousand 415 dollars. Per capita income is projected to be $12,875 in 2024 and $13,717 in 2025.

CURRENT DEFICIT, EXPORTS AND TOURISM INCOME

Turkey’s tourism revenue is projected to be $55.6 billion in 2023, $59.6 billion in 2024, $64.7 billion in 2025 and $71.3 billion in 2026.

The export forecast in the OVP was 255 billion dollars for 2023, 267 billion dollars for 2024, 283.6 billion dollars for 2025 and 302.2 billion dollars for 2026.

The import forecast in the OVP was $367 billion for 2023, $372.8 billion for 2024, $388.9 billion for 2025, and $414 billion for 2026.

While the current account deficit is expected to be $42.5 billion in 2023, it is expected to be $34.7 billion in 2024, $31.7 billion in 2025, and $30 billion in 2026.

STRUCTURAL REFORMS ARE ADDED

Vice President Cevdet Yılmaz stated that the program included structural reforms. Yılmaz said: “Their goal is to ensure macroeconomic and financial stability and reduce inflation to single digits.”

Yılmaz also said: “We will continue the monetary policy with an updated version according to the needs of the period. Our central bank will also do what is necessary within the scope of instrument independence.”

ERDOĞAN’S EXPLANATIONS

Following Cevdet Yılmaz’s remarks, President Recep Tayyip Erdoğan also spoke about the OVP.

In his speech, Erdoğan reversed the “cause interest, result inflation” thesis he had been advocating for years, saying: “With the support of a tight monetary policy, we will reduce inflation to single digits again and improve the current account balance. “

The highlights of Erdogan’s speech are as follows:

* We never ignore the earthquake that occurred on February 6 in our economic plans.

* The earthquake disaster, which cost our country’s economy $104 billion, adds to our burden and complicates our fight.

* We achieved a growth rate of 3.9 percent in the first half of 2023, increasing our growth performance to 12 quarters without interruption. Annually, we have been growing continuously for 13 years.

* We have managed to bring our economy to an economic size of more than 1 trillion dollars for the first time annually.

* In this way, we managed to limit the negative effects of the earthquake on economic activities.

* We achieved 165 billion dollars in exports in the first 8 months of the year, and 253.5 billion dollars annually. We are having a much better tourist season than the previous year. There is also no job loss.

* In the first 6 months of the year, we achieved a net increase in employment of 220,000 despite regulations on eligibility for retirement and the negative impact of the earthquake.

‘Inflation is our problem’

* Inflation, which has reached the peaks of the last 60 or 70 years in the world, is naturally our problem.

* In the fight against inflation, we have taken some additional measures to the subsidies that we have implemented in energy prices, especially natural gas, and the application of maximum prices to rental prices.

* Controls against opportunists and greedy continue to increase. We are witnessing that the price bubble in some sectors decreases and the market finds its equilibrium.

ERDOĞAN CHANGED HIS OPINION ON INTERESTS

* The reserves of our Central Bank continue their strong course at 117.3 billion dollars.

* Our country has a very low risk of household indebtedness compared to the average for developing countries.

*We have identified priority reform areas in 7 basic areas.

* We definitely will not compromise economic growth.

* Supported by tight monetary policy, we will reduce inflation to single digits and improve checking account balances.

EXPLANATION OF INFLATION

* With the basket of policies implemented in the PMP, we will remove the problem of inflation from our country’s agenda.

*We will avoid increases in consumption that feed inflation.

* With growth policies based on investment, production, employment and exports, we will provide financing opportunities that support the real sector with a focus on price stability.

* To guarantee the stability of food prices and security of supply, we will determine the adequacy ratios of strategic agricultural products and carry out production planning.

* We are accelerating investments to establish an organized greenhouse agriculture zone in order to minimize the seasonality of fresh vegetables and fruits.

‘KKM FULFILLED ITS ROLE’

* Our Foreign Currency Protected Deposit system has fulfilled its duty and has contributed significantly to guaranteeing the stability of the exchange rate.

* We will pave the way for our currency-protected deposits to become TL deposits on a ground where exchange rate stability is consolidated.

* Our central bank will support our investments without compromising the stance required by monetary policy with the anticipated committed investment loan that we will update according to the new conditions.