Finance and Treasury Minister Berat Albayrak has kicked off a campaign to fight an all-out war against inflation that has started to threaten the Turkish economy.The Turkish Statistical Institute (TurkStat) recently put one-year consumer inflation at 25 percent while wholesale inflation was a massive 46.1 percent. This meant that unless some urgent measures are taken, inflation would shoot up in the coming months and deal a huge blow to the Turkish economy.
This, of course, called for some urgent measures to combat the rising prices, which has now emerged as a major menace to our economy.
Turkish companies have also joined the all-out fight against inflation by agreeing to a 10 percent reduction in prices of all goods and products, effective as of this morning. This is really a great sacrifice at a time when companies are pushed by inflation pressures to increase their prices in view of the increasing input costs. This is something that should be applauded and encouraged. It also needs to be rewarded by the government in some form.
Besides the sacrifices made by the companies, the government is also doing its part. Minister Albayrak announced that the administration would not increase gas and electricity prices until the end of the year.
All these are some appropriate steps in the right direction. However, they will not be enough on their own.
The administration has to encourage all-out production. This means producers and manufacturers have to be encouraged to increase output and thus boost production in the country that will supplement the sacrifices made by the companies that have agreed to the 10 percent price reductions.
This cannot be done when medium-scale companies face serious financial difficulties. That is why the measures announced by the bankers union to defer payments of credits less than TL 15 million ($2.44 million) for six months and allow the credits to be paid back in 24 installments is an excellent move to inject life into the industries and let production continue uninterrupted.
It is really pleasant to observe that the banking sector has taken the appropriate lessons from past economic crises and is now treating the industry with more consideration and care.
Sacrifices and the encouragement of companies are all good measures. Yet we also have to attack the core reason for inflation in Turkey. While we have been hit by international financial and economic developments that have hurt all the developing economies across the globe we also have to accept the fact that structural problems in our economy are the culprit for inflation. We have to seriously tighten our belts, adhere to the rules of tight monetary and fiscal policies while we boost production.
This means securing foreign funds to boost investments, increase our production capacity and diversify exports.
The days of abundant international funds to finance our projects are now gone. We have to face these realities and act accordingly.
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