Erdoğan announces economic reforms

Erdoğan reveals new economic reform package for Turkey

Turkish President Tayyip Erdoğan announced a comprehensive reform plan to transform Turkey’s economy into one of the 10 largest in the world.

Turkish President Recep Tayyip Erdoğan announced on Friday the measures of the new economic reform package for Turkey that, he said, will shape the future Turkish economy and help it achieve growth based on production, investment, employment and exports.

Macroeconomic and structural policies constitute thecore of Turkey’s new economic reforms,” ​​Erdoğan said when presenting the plan – redacted with the collaboration of the private sector – in Istanbul, where he stated that his government is determined to turn Turkey into one of the 10 largest economies in the world. “Despite the coronavirus pandemic, the Turkish economy grew by 1.8% in 2020, the 2nd in the G-20 only behind China,” he recalled.

To achieve this, the government’s top priority is fiscal discipline, said the Turkish president, adding that one of the goals of the plan is to have stronger public funding to protect the economy against future risks. However, Erdoğan insisted on the need to reduce public spending and promote savings in the Administration, for example by reducing vehicle rentals and expenses for travel and institutional representation.

Insisting that reducing the state deficit will be one of the reform priorities, Erdoğan cited three policies that seek to achieve this goal: combat the structural deficit, boost exports in small and medium-sized enterprises (SMEs) that have not exported so far, and support green transformation in the industry.

Control debt, spending and inflation, among the priorities

Among the structural policies, the reforms seek to strengthen institutions, promote investment, facilitate internal commercial exchanges, and improve competition and market control and supervision. They are also committed to control spending and public debt, regulating taxes, promoting public contracting as well as collaborations between private companies and the State (following the model of hospital cities), and by creating state companies in key sectors of the economy.

The Turkish president also underlined that one of the country’s great priorities will be to combat inflation and rising prices with the aim of reducing it to below 10%. He also announced that efforts will be increased to reduce debt in foreign currencies in order to mitigate the impact on the Turkish economy from external events.

Bet on the national software, health and defence industry

Other details of the economic reforms announced today by Erdoğan are:

  • Creation of the economic, technological and legal infrastructure for digital currency.
  • Creation of an Agency for the Software and Hardware Industry to increase the competitiveness of Turkish companies and promote youth employment.
  • Creation of an Economic Coordination Agency and an Economic Stability Agency.
  • Greater control and transparency in the relationships between banks and clients, protecting consumer rights.
  • Expansion of the Private Individual Pension System so that those under 18 years of age, who make up 25% of Turkey’s population, can also participate.
  • Creation of a Health Industry Agency to promote competition, research and innovation in the sector.
  • The software and healthcare industry, together with the defence industry, will be key in the development of the Turkish economy in the coming years.
  • Tax exemptions for 850,000 small businesses and entrepreneurs to help them recover after the pandemic.

“We want an economy that reduces imports and sets new records in exports, thanks to a production of added value,” said Erdoğan when speaking of the new package of economic reforms for Turkey, which seeks to achieve macroeconomic stability for the Eurasian country by focusing its efforts in areas such as public financing, inflation, financial sector, fiscal deficit, and employment.