Erdoğan administration cost-cutting in public sector, to secure 35 bln lira

Treasury and Finance Minister Berat Albayrak, who spoke at a press conference to announce Turkey’s "new economic model," failed to offer a policy message
Friday, 10 August 2018 20:25

Turkish AKP government has taken strong cost-cutting steps in the public sector to meet its year-end targets and has moved to secure 35 billion lira ($5.6 billion) through savings and increased revenue, Treasury and Finance Minister Berat Albayrak said on Friday.

Albayrak, finance minister and son-in-law of Turkish President Recep Tayyip Erdoğan rolled out the AKP government's "new economic plan" on Friday, promising central bank independence and tighter budget discipline.

He said Turkey will shift to a more effective model for funding mega-projects.

Albayrak promised structural reform, economic rebalancing and "sustainable and healthy growth", without spelling out precisely what the government planned to accomplish or how.

"One of the most important elements of our new economic approach is that it is a decisive approach," Albayrak told leading private sector representatives as he revealed his plans at İstanbul’s Dolmabahçe Palace on Aug. 10.

"In this process, we will finely work every single detail as a wide spectrum including all national and international stakeholders," he said in the first part of his speech, referring to Turkey’s Medium-Term Economic Plan (OVP).

"Another of our main principles is to establish full independence of monetary policy. I refrain from talking about the Central Bank as much as I can and when I have to speak, I use a sensitive language. The Central Bank’s independence should always continue as a principle. Its independence is very important. Reinforcing financial stability will be one of our high priority targets," he added.

Albayrak did not spell out concrete steps to cushion the free-fall in the lira, now in the throes of a full-blown currency crisis, but said the focus should be on the "big picture" instead of day-to-day events.

"With strong communication, we will in a robust way work to boost confidence in the Turkish lira," he said.

The lira's sell-off accelerated after U.S. President Donald Trump said Washington would double down on steel and aluminium sanctions against Turkey. The currency fell more than 20 percent at one point.