New reform package to increase predictability, help Turkey attract more direct, portfolio investment, says finance minister
Turkey’s new landmark economic reform package aims to attract delayed investments, the country’s minister of treasury and finance said on Tuesday.
“Global investments narrowed by over 40% in the pandemic period. We’re facing delayed demand,” Lutfi Elvan told Anadolu Agency’s Editors’ Desk in the capital Ankara.
Elvan underlined that Turkey has significant advantages in attracting investments with the reform package.
The package will increase predictability and make the country more attractive for direct and portfolio investments, he stressed.
Giving information about the efforts to explain the Package to foreigners, Elvan said that information about the package was requested from many different countries and their embassies.
“We’ll come together with EU and G20 ambassadors, as well as foreign investors, to share the details of reform agenda,” he stated.
Announced by President Recep Tayyip Erdogan last Friday, the package included several measures such as reducing the share of foreign exchange in total debt stock and establishing new mechanisms, namely the Healthcare Industries Presidency, Software and Hardware Industries Presidency, Economic Coordination Council, and Financial Stability Committee.
Underlining that the world is in the midst of rapid change and transformation, Elvan said Turkey would expand its share of the global supply chain with its strategic location and strong human resources.
“The reforms will help Turkey to seize this opportunity,” he said.
On inflation, Elvan stressed that a holistic approach, including monetary, fiscal, and structural policies, would be needed to achieve the government’s goal of reducing it to the single digits.
He added that the main function of the recently established Price Stability Committee was to develop solutions to supply shocks that pose inflation risks.
“Problems related to supply shocks can’t be solved with monetary policies,” he said.
Noting that financial technologies are important for young people, Elvan said Turkey would set a roadmap in this field and establish a fin-tech base within the Istanbul Finance Center, currently in construction.
He underlined the country’s “incredible potential” in fin-tech and said this should be utilized.
With new technology in the last decade, such as blockchain, having accelerated central banks’ efforts to digitize money, Elvan said:
“Turkey is working on a Turkish-lira-pegged digital currency, for which technological, legal, economic and financial infrastructure is currently under preparation.”
Elvan also underlined that budgetary discipline is “extremely important” in public finance. “We’ve never compromised on fiscal discipline since 2002.”
“Of course, there has been a slight increase in our budget deficit in recent years,” he said, adding that the government has taken measures, especially in public finance.
Pointing to steps taken by both the central government and local administrations in Turkey to support low-income groups, Elvan emphasized that it would be crucial to provide this support effectively and reach those in need.
He also said Turkey would increase R&D support for its green transformation, adding the government was aware of the needs that would be required to level up its share in green finance
Elvan said the green transformation in the industry would be at the forefront in loan allocations and supporting projects, especially in the coming period.
“We want to establish green industrial zones,” said Elvan, adding that any waste would be recycled back into the economy.