Energy prices soar inflation, Ankara is working on a solution: Nebati

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Rising global energy prices are accelerating inflation in Turkey, but Ankara will continue to work diligently to bring it down, Finance Minister Nureddin Nebati said on Saturday. He added that the lira’s recent decline was within “acceptable” levels.

Inflation hit 54% in February and economists expect it to continue to rise towards 70% in the coming months after Russia’s invasion of Ukraine sent inflation skyrocketing. commodity prices and caused the lira to fall.

Speaking at a business conference in the southern resort town of Antalya, Nebati said a government-backed program that protects lira deposits from depreciation has helped eliminate concerns about what he called “attacks” on the lira exchange rate.

“What we have seen in recent months is that the exchange rate is stable and moving within acceptable limits,” he said.

The lira is down 11% against the dollar this year, pushed more recently by the economic fallout from the Russian invasion of Ukraine.

Although the currency fell 44% last year, a program to protect the lira and central bank interventions in the foreign exchange market helped stem the currency crisis in December.

The central bank cut its key rate by 500 basis points to 14% between September and December, but kept it unchanged for the last three meetings.

Turkey’s new economic plan prioritizes a current account surplus, exports, credit and growth while keeping interest rates low.

However, Russia’s actions in Ukraine, which it calls a ‘special operation’, risk widening Turkey’s current account deficit due to higher commodity prices and a potential decline. income from tourism.

Reiterating that energy prices rose rapidly after the Russian-Ukrainian tension, Nebati said the government was now taking significant steps “to ensure a transition to green energy”.

“We support research and development activities for green production. Our president announced two good news. The first will support all our farmers, unions and cooperatives engaged in agricultural production for investments in solar power plants (SPP). We have provided significant financial resources for this. We will announce the details of this soon.

Nebati said that significant successes have also been achieved in tourism: “Last year, Turkey received more tourists than Spain in the Mediterranean basin and earned more than 24.5 billion dollars (362 billion of TL) in tourism. We are moving quickly towards the pre-pandemic statistics. »

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