Erdoğan unveils Turkey’s economic reform plan

0
73

ANKARA, MAR 12 – Turkish President Recep Tayyip Erdoğan on Friday unveiled a long-promised economic reform package that he hopes will boost the confidence of skittish foreign investors and temper inflation while boosting trade.

It included tax breaks for small business owners and a pledge to improve efficiency that could help export-driven growth.

“The package aims to grow the Turkish economy on the basis of investment, production, jobs, and exports,” President Recep Tayyip Erdoğan told the Economic Reforms Introductory Meeting at the Halic Congress Center in Istanbul.

Turkey will raise its potential growth through boosting production efficiency thanks to this reform package, Erdoğan noted.

“We aim for a domestic and national economy which break export records with fewer imported input and more value-added production,” the president said.

He identified the fight against persistent inflation as “one of the main objectives” with the goal of quickly “bringing it down to single digits“.

Turkey weathered the 2009 global economic crisis and post-2013 crises in both politics and the economy to keep its 2023 targets within reach, Erdoğan stressed.

“We will achieve our goals by working day and night to make Turkey one of the world’s top 10 economies,” he said.

Saying that macroeconomic and structural policies form the backbone of Turkey’s new economic reforms, Erdoğan said Turkey is focusing on public finance, inflation, the financial sector, current account deficit, and employment as part of macroeconomic stability.

Encouraging investments, easing domestic trade, competition policies, market surveillance and control are in the reform package as part of structural policies, he noted.

STRONGER PUBLIC FINANCE

Turkey’s first target is setting stronger public finance structure to guard against risks, with fiscal discipline the top priority, the president underlined.

The share of foreign exchange in the country’s total debt stock will be cut to reduce its sensitivity to external shocks, Erdoğan said.

He highlighted that savings in public administration will be expanded such as limiting vehicle rentals and hospitality costs, adding:

“In addition to the central government, we aim to create a thrifty perspective in local administrations as well.”

Noting that the government knows of the difficulties small business owners have been struggling with during the pandemic, Erdoğan said the reform package also includes a tax exemption for low-income tradesmen.

“We will be exempting approximately 850,000 tradespeople who are subject to small business taxation rules, such as hairdressers, plumbers, haberdasheries, carpenters, lathe makers, tea shop operators, tailors, and repairmen, from income tax, and we will remove their tax filing obligations,” he said.

EASING TAXES, PUBLIC-PRIVATE PARTNERSHIPS

A digital tax office will be established which will operate 24 hours a day, seven days a week to enable the public to carry out their transactions in the digital environment without personally visiting a tax office.

“We have also included the tax problems faced by international investors within the reforms,” he noted, adding that the country is revising double taxation avoidance agreements to prevent possible problems that may arise.

As the country has praised public-private partnership projects, exemplified by city hospitals, Erdoğan said a public-private sectors cooperation law will be enacted.

“This will enable us to ensure that investors deal with a single law, to strengthen the legal infrastructure of projects, to introduce priorities among sectors and projects, and to make processes more foreseeable,” he said.

Stressing that one of the priority agenda items will be the fight against inflation, Erdoğan said Turkey aims to bring inflation down to single digits.

An early warning system will be established that will ensure the flow of data in order for the Food Committee to form policy recommendations and ensure that the market operates effectively.

In order to increase foreseeability in agricultural production and prevent price fluctuations, contractual agricultural mechanisms are being developed, he stressed.

Turkey is preparing uniform legislation that will accelerate the development of the participation financing sector, he said, adding: “A Central Advisory Board for the sector will be set up while the participation financing sector will be gathered under a single roof.”

A participation financing arbitration mechanism at international standards will be established, he underlined.