Finance minister: High inflation is a problem not only in Turkey, but in the world

* Photo: Serhat Çağdaş / AA

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Minister of Treasury and Finance Lütfi Elvan made a presentation on the 2022 budget at the Parliamentary Commission on Planning and Budgetary today (November 12). Elvan addressed a series of issues, including the increasing exchange rates and consumer inflation.

While Central Bank Governor Şahap Kavcıoğlu defended the latest interest rate cut by referring to the attempts to close the current deficit and increase exports, Elvan said, "The comments that our government aims to have high current exchange rates to support exports are not true."

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Referring to the floating exchange rate regime, Elvan said that the value of the exchange rate is set by the market.

According to the Minister, "high inflation has started to become an important problem not only in Turkey, but across the world."

He said, "When we observe the inflation dynamics in our country, we see that global developments, cumulative exchange rate effects, increasing food prices and defects in pricing have been effective."

Noting that "there have been fluctuations in the financial markets, with the effect of global developments, for the past 2 months," Minister Elvan said, "We are aware of the mobility in policy rates, asset prices, exchange rates and expectations. Global conjuncture and the course of domestic inflation entail deliberating."

The Minister recalled that "when compared to the end of 2020, the Brent oil price per barrel increased by 64 percent while natural gas prices per cubic meters increased by 250 percent in Europe."

"The drought we were subjected to highly decreased the share of hydroelectric power plants in power generation and increased our power generation costs," he said, arguing that they do not take these cost increases on citizens and take upon a significant part of it themselves."

He also expressed the expectation that "tax reductions and price adjustments will have a decreasing effect on the Consumer Price Index."

Referring to "the strong financial system of Turkey's economy, which is resilient to external shocks," Minister of Treasury and Finance Lütfi Elvan said, "In our 2021 budget, we foresaw that the budget deficit would stand at 4.3 percent. We will end this year with a budget deficit of less than 3.5 percent." (HA/SD)