Simsek: Türkiye will stay course on disinflation program

Treasury and Finance Minister Mehmet Simsek said Wednesday at the Presidential Complex that Ankara will maintain its economic stabilization program and deliver on disinflation targets despite challenging global headwinds. Speaking alongside Vice President Cevdet Yilmaz and Presidency of Strategy and Budget head Ibrahim Senel during the launch of Türkiye’s 2027-2029 Medium-Term Program, Simsek defended the administration's fiscal roadmap against skeptics who point to external volatility.

Simsek acknowledged that the government had set ambitious benchmarks for the three-year horizon. “The only criticism we would accept is that we have been ambitious in our targets. We have, and there is, of course, a cost associated with that. But the commitment is there,” he said, adding that the trajectory matters more than immediate turbulence. “We will stay the course and deliver. What is important is the direction of travel.”

The minister rejected opposition claims that the 2027 inflation target was revised upward to accommodate easier monetary policy. “The idea that the inflation target for 2027 was revised upward in order to loosen monetary policy never came onto our agenda,” he stated, noting that the adjustment reflected shifting energy and commodity prices alongside a complex geopolitical landscape. “When the facts change, of course, forecasts change,” Simsek added, pointing to international data showing inflation typically requires 3.4 years to return to pre-crisis levels. He projected that Türkiye would reach pre-shock inflation rates by the end of 2027.

Financial integrity and sanctions compliance

Simsek emphasized Ankara's cooperation with Washington on financial oversight, stating that Türkiye maintains close information-sharing channels with US authorities. “Türkiye is committed to combating terrorist financing, any form of illicit financial activity, money laundering, sanctions evasion and all forms of illicit trade,” he said, stressing that all companies operating in the country must adhere strictly to national regulations and avoid violating international sanctions.

Addressing questions about energy imports from Iran, Simsek outlined a restricted payment mechanism designed to comply with US sanctions. “We do not pay Iran directly for the natural gas. We have an understanding, again, with the US. The money sits in a very tightly regulated account, and payments can only be made for items such as food and medicine,” he explained. “There is a well-established framework governing how natural gas payments are managed.” Simsek noted that Iranian supplies constitute a relatively small portion of Türkiye’s gas imports, with the US now ranking among the country’s leading LNG suppliers.

Exchange rate transition and housing supply

The minister addressed speculation about an imminent return to a free-floating exchange rate, calling such rumors baseless. “This is not about being afraid of returning to a free float. It is about getting the conditions right,” Simsek said, explaining that the shift requires lower inflation, anchored expectations, and two-way currency flows. He clarified that daily exchange-rate policy remains the exclusive domain of the Central Bank, with the Medium-Term Program assuming a neutral real exchange rate trajectory.

Simsek highlighted structural investments in housing as a disinflationary tool, citing $104 billion allocated to earthquake reconstruction and 621,000 housing units delivered or scheduled for completion this year. He noted that rent inflation in affected provinces has stabilized at approximately 20%, compared with 50-60% in other regions, demonstrating that supply-side interventions yield measurable results. The government aims to add 750,000 state-funded social housing units to further ease cost pressures.

Selective credit programs continue to support manufacturers, farmers, small enterprises, and technology investments, Simsek said, preserving employment while steering resources toward productive sectors. “The ultimate goal of this program is a sustainable high growth rate and better income distribution. So, basically, better standards of living for Turkish people,” he concluded.