Disinflation process will continue, says Şimşek

ANKARA

Although the pace of disinflation has temporarily slowed due to cyclical factors, the process remains on track, Treasury and Finance Minister Mehmet Şimşek has said.

Speaking before the Parliamentary Planning and Budget Commission on Nov. 6, Şimşek emphasized that tight monetary policy, supportive fiscal measures, price adjustments aligned with targets and supply-side initiatives — particularly in social housing — will sustain the disinflation trajectory.

Şimşek described economic activity as moderate, with growth in 2025 expected to mirror that of 2024, supporting the disinflation path.

The minister highlighted that strengthened financial stability has improved the country’s risk perception. He noted that Türkiye’s risk premium, which had risen to 700 basis points before the economic program, has now fallen below 250 basis points.

Reflecting on the past two years, the minister underscored significant achievements under the program.

He pointed to progress in reinforcing macro-financial stability and enhancing resilience against shocks.

One of the most notable improvements, he said, was in the current account balance: The deficit, which stood at 5 percent of GDP in mid-2023, declined to 0.8 percent in 2024.

“By the second quarter of 2025, the ratio was 1.3 percent, and projections suggest it will average 1.2 percent during the medium-term program, a level considered sustainable,” Şimşek said.

The minister also announced that as of October 2025, Türkiye secured $13.6 billion in long-term financing under favorable conditions — the highest annual figure to date.

On the issue of FX-protected deposits (KKM), he reported a successful transition out of the scheme, with balances reduced to 171 billion Turkish Liras by Oct. 24, and expected to fall below 5 billion liras by the end of the year.

Looking ahead, Şimşek said the government aims to limit the budget deficit to 3.5 percent in 2026. He added that non-interest expenditures are projected to rise by 0.7 percentage points compared with 2025, in line with fiscal targets.