Türkiye will stay the course with its tight economic policies to combat inflation, and though it may fine-tune the program it will not change course, according to Vice President Cevdet Yılmaz.

"There is no plan to pause our program," Yılmaz said at a briefing with reporters in Istanbul on Thursday. "All programs are dynamic, and adjustments can always be made."

Yılmaz, who plays a key role overseeing economic policy, said any such adjustments would aim to support production, investment and exports while moderating consumption.

"(The calibrations we will make) could be toward supporting production, investment and exports more, and making consumption somewhat more moderate," he said.

"Otherwise, there will be no loosening in terms of the overall scale of the program."

Türkiye has pursued tight monetary and fiscal policies for more than two years in order to reduce price pressure. But high financing and borrowing costs have weighed on businesses and households.

Inflation eased steadily over the last year and ended 2025 at 30.89% annually, the lowest rate since November 2021. That compared to 44.4% posted a year earlier.

Yılmaz said the government does not plan to revise its inflation projections in the Medium-Term Program, despite recent progress in disinflation.

The government expects improvements in inflation in the first quarter, which should reflect to market expectations for year-end inflation around 23%, he added.

The government projects inflation to dip as far as 16% by the end of the year, within a 13%-19% range, and falling to 9% in 2027. The central bank forecasts inflation between 13%-19% by end-2026.

Yılmaz noted inflation fell by nearly 45 points despite pressure from elevated food prices, hit by agricultural frost and drought.

The agricultural sector is expected to support growth and help ease price rises this year, which could help achieve official inflation targets, he said.

Avoiding rapid inflation drop

Yılmaz said the government wants to avoid a rapid drop in inflation that could hurt economic growth, jobs and social stability.

"Could inflation be reduced faster? Yes, if you sacrifice growth, employment and social balance," Yılmaz said, but stressed that would come at very high economic and social cost, adding that the government is managing this process in a balanced way.

Türkiye's economic program was established in 2023 and aims to dislodge high inflation expectations while boosting production and exports, in order to address long-standing current account deficits.

Encouraged by the downward trend, the Turkish central bank eased policy through most of last year, shaving 950 basis points off its benchmark policy rate to bring it down from 47.5% to 38%.

While the bank has emphasized that future decisions will remain data-driven and assessed on a meeting-by-meeting basis, it's still widely expected to continue with its easing cycle.

No exit from lira expected

Asked whether lower rates could trigger an exit from the Turkish lira currency, Yılmaz said: "What matters is real interest rates. Lowering rates as inflation falls does not affect real rates, so we do not expect such an impact."

He stated that in an environment where inflation is falling in a healthy manner, a decrease in interest rates would not bring about an exit from the lira.

Yılmaz added that they do not expect a shift toward the U.S. dollar or gold as rates decline under such conditions.

He added that the government will strengthen mechanisms that selectively support companies while improving overall financial conditions.

"We will both improve the overall financial situation and strengthen our mechanisms that provide support more intensely and selectively to certain areas," he said.

Expressing that they support companies that protect employment in labor-intensive sectors, Yılmaz stated that they will increase this support from TL 2,500 to TL 3,500.

The government expect the budget deficit to gross domestic product (GDP) ratio to have ended 2025 at around 3%, according to the vice president.

Yılmaz stated that they prepared the budget with the assumption of reducing the state contribution in the Private Pension System (BES) from 30% to 20%.

"Therefore, the figures there will not change much," he said.

Yılmaz also noted that issues such as changes in withholding tax on lira deposits are not currently on their agenda. Regarding the supplementary pension system, he said there is no mature study at the moment.

Yılmaz said the government expects Türkiye's GDP to have exceeded $1.5 trillion in 2025 and per capita income to have surpassed $17,000.

The government's targets for 2026 include a GDP of $1.7 trillion, 3.8% growth, per capita income approaching $19,000, a current account deficit to GDP ratio of 1.3% and inflation below 20%, according to Yılmaz.