Nureddin Nebati: We will bring new instruments

Nureddin Nebati stated that the interest of the citizens in the currency protected TL time deposit/participation fund is high, "According to the temporary latest data obtained from the banks, there is an 84.05 billion lira currency protected deposit/participation fund balance in the banking sector." Nebati made an assessment to Anadolu Agency (AA) regarding the details of the Turkish Economy Model and expectations for 2022. Stating that the Turkish Economy Model aims to ensure permanent macroeconomic stability, encourage high value-added production, expand production and employment, and reduce the current account deficit by increasing exports. Nebati said, "Establishing a safe investment environment is important for our model to reach its final goal. Therefore, financial stability is the first priority. We are taking steps to ensure its continuity." Nebati said that they have put into practice tools such as 'currency-protected TL deposit account' and 'Turkish lira-settled forward foreign exchange sales' for exporters in order to improve market expectations and eliminate uncertainties that may hinder investment and production decisions. Recalling that they announced a series of measures to promote the currency-protected deposit account, Nebati drew attention to the importance of the steps taken towards financial stability. Pointing out that they have reduced the withholding tax rate on government securities (GDDS) to zero percent for this purpose, Nebati said, "We have reduced the withholding tax rate applied to dividend income from 15 percent to 10 percent. In order to ensure the sustainability of the scrap gold valuation system, which is important for bringing unused gold into the economy, we have made changes to the minimum milliyem values ​​to be used in the valuation of scrap gold."

New regulations are on the way

Giving information about the work to be done in the future, Nureddin Nebati said: "Other studies will be carried out to transfer the unused gold to the financial system in the coming period. The state's contribution to the private pension system (BES) will be increased from 25 percent to 30 percent. The corporate tax rate will be made competitive. Value-added tax will be simplified. Investment funds and exceptions will be applied to profit shares obtained from partnerships. Income-indexed securities will be issued. A Priority Sector Lending Program will be implemented. Long-term credit and surety opportunities will be developed as part of a Credit Guarantee Fund package to encourage investments. Project banking will be expanded."

"Citizens are very interested in the currency protected TL system"

Minister Nureddin Nebati also shared up-to-date information on the transition to currency protected TL time deposit accounts and said, "Although we are at the beginning of the implementation, it is seen that citizens have a high interest in currency protected TL time deposit/participation funds. According to the temporary latest data obtained from banks, 84.05 billion dollars were spent in the banking sector. There is a TL currency protected deposit and a participation fund balance. Explaining the details of the sectors that will be prioritized in the incentive system, Nebati said: "Strategic sectors such as energy, defense industry, aviation, and pharmaceuticals, which will have a direct impact on the current account deficit and have advanced technology and high total factor productivity, and vital sectors such as agriculture and animal husbandry, will be supported to encourage domestic and value-added production."

"Legal infrastructure work continues on the simplification of VAT"

Nureddin Nebati stated that they are working to ensure the principles of efficiency, fairness, and simplicity are in the relevant law within the scope of the VAT simplification and that legal infrastructure work on VAT exemptions, rates, and refund processes is ongoing. Nabati stated that with the arrangements to be made, it is planned to reduce the size of the informal economy, increase the number of registered taxpayers, improve the business and investment environment, encourage exports and provide companies with rapid access to finance through a VAT refund.

"We will reduce inflation"

Minister Nureddin Nebati stated that they saw the effect of managing expectations well on the exchange rate after President Recep Tayyip Erdoğan's package of measures was announced on December 20th. "You all know the pass-through of the exchange rate on inflation. By developing instruments such as a new currency-protected deposit account, we will reduce inflation and increase the attractiveness of the Turkish lira by managing expectations well. Noting that there is another structure that they foresee coming into play in the case of supply shocks, where the effect of monetary policy is limited, Nebati said that they discussed the steps that they can take in this framework at the Price Stability Committee, which held its first meeting on December 28, 2021. Nebati said, "In the upcoming period, our institutions will act in full coordination in the fight against inflation. Our ultimate goal is to achieve permanent low levels of inflation."

"We expect a stable course in the exchange rate over time"

Nureddin Nebati said that the Turkish economy, with its dynamic structure, survived the severe shocks it faced with minimal damage compared to the past, adding that "We expect the impact of the recent volatility in financial markets on economic activity and confidence to be temporary and limited." Addressing the inflation, exchange rate, policy rates, and growth expectations for 2022, Minister Nebati said: "Foreign exchange rates are determined in the free market. For this reason, we do not have any exchange rate targets, but we did watch the movements in the financial markets that were not compatible with the fundamentals of the economy. In 2022, we will see the effect of the measures taken on the movements in the financial markets more clearly. A more balanced growth performance and increasing growth performance for 2022. In addition to employment, we expect the positive outlook in the current account balance to continue with the positive contribution of strong exports and tourism." Referring to the recent increase in exchange rates, Nebati said, "With the effect of the action steps we have announced, we expect the fluctuations in this transition period to decrease over time and we expect a stable course in the exchange rate."