President Recep Tayyip Erdoğan on Tuesday said Türkiye would take steps to strengthen its medium-term program (MTP), and the three main priorities are to increase public savings, prioritize investments and accelerate structural reforms.

Speaking on Tuesday evening after a Cabinet meeting, Erdoğan said his economic team had made preparations for such steps to strengthen the economic program and, "hopefully, we will share them with the public very soon."

"We have three main priorities in strengthening the MTP. These are to increase public sector savings, prioritize investments and accelerate structural reforms."

Türkiye walked away from years of easing policy after last year's presidential and parliamentary elections. It delivered aggressive tightening aimed at cooling demand to curb inflation, rebuilding reserves and flipping chronic current account deficits to surpluses.

As part of the MTP, unveiled last September, the government pledged to deliver comprehensive structural reforms and ramp up savings.

Treasury and Finance Minister Mehmet Şimşek on Tuesday hinted at potential adjustments in the medium-term program, as he lashed out at rumors there were disagreements within the government about economic policies.

"We will further strengthen our program, which our President has fully supported from the beginning," Şimşek wrote on social media platform X, formerly known as Twitter.

"We are determined to reduce inflation, decrease the current account deficit, establish budget discipline, and resolve structural issues."

Speaking to reporters after the Cabinet meeting, Vice President Cevdet Yılmaz said both the Treasury and Finance Ministry and the budget authority were carrying out studies on public sector savings, with more than 15 articles being worked upon.

"We mean not only reducing expenditures but making existing expenditures more efficient, prioritizing them and making them contribute more to the economy's competitiveness, efficiency and social welfare," state broadcaster TRT reported him as saying.

No mid-year wage hike

Separately, Labor and Social Security Minister Vedat Işıkhan said the government does not have plans for a new mid-year minimum wage increase.

In addition to the traditional annual revisal announced in January, the monthly net minimum salary was also raised in July for the past two years to ease the pressure on households.

But the government has said it would stick to a single, nearly 50% increase for 2024.

In an open letter to the government earlier this month, the central bank also laid emphasis on a once-a-year minimum wage increase, as additional hikes could complicate its efforts to anchor inflation expectations.

Erdoğan acknowledged the difficulties high inflation has caused, particularly among retirees and minimum wage earners.

"In this regard, our approach is not to resort to palliative measures to get through the day, but rather to reduce inflation and ensure a permanent increase in prosperity," he noted.

On Wednesday, Erdoğan said the fact that Türkiye is free of elections until at least 2028 would help them focus more on the main challenges, spearheaded by inflation.

"Hopefully, within the next four years, during which there won't be any elections, we will successfully overcome our battle against inflation," he told a parliamentary group meeting of his ruling Justice and Development Party (AK Party).

"We have done it in the past, and we will do it again."

Year-end inflation goal

The Central Bank of the Republic of Türkiye (CBRT) has raised its key one-week repo rate by 4,150 basis points from 8.5% to 50% since last June, mainly to ease demand, the main driver of inflation.

After last month's 500 basis point hike that stunned the markets, it cited a deteriorating inflation outlook and pledged to tighten even further if it expects the price situation to worsen significantly.

Running at nearly 70%, inflation is expected to continue rising toward the mid-year before entering what officials expect to be a steep downward trend in the second half of 2024.

"We expect the annual inflation to start decreasing in line with market expectations from the second half of the year," Erdoğan said.

CBRT Governor Fatih Karahan told a panel in Washington on Tuesday that Türkiye is on track to reach its 36% inflation target by the end of the year after peaking at around 75% in the coming months.

The central bank last month took other steps to tighten credit, including action on reserve requirements, prompting some banks to either reduce loan limits or even stop offering loans. It also raised the maximum rate on credit card cash withdrawals.

Erdoğan also said on Tuesday evening that economic growth will approach 4% this year with a positive impact from exports, and forecast that the current account deficit will be 2.5% of gross domestic product (GDP) at the end of the year.

Official data on Wednesday showed that Türkiye's current account deficit stood at around $3.26 billion in February, less than a market forecast for a deficit of $3.7 billion.