In the aftermath of the nine-day Qurban Bayram (also known as Eid al-Adha) break, the economy administration is expected to take steps in economic policy and launch the new medium-term program, which the markets have been waiting for. Next week, efforts to prepare the medium-term program will intensify, and the new economic program will cover the three-year period from 2019 to 2021. According to Law No. 5018, the medium-term program has to be published in the first week of September. When the program is unveiled, revised figures for 2018 and targets for next year will be clarified.
According to last year's medium-term program, which covers the period of 2018 to 2020, the growth target for 2018, 2019 and 2020 was set at 5.5 percent. Inflation estimates were 7 percent for 2018, but 6 and 5 percent, respectively, for 2019 and 2020.
In a statement released on Aug. 9, Treasury and Finance Minister Albayrak said the current account deficit would hover around 4 percent of the gross domestic product at the end of this year. The ministry also estimates that the Turkish economy will register growth of around 3 to 4 percent next year. Additionally, the ministry's statement emphasized that efforts to cut public spending will continue and the budget deficit will be around 1.5 percent of GDP. The target is to generate TL 35 billion ($5.77 billion) in savings and TL 5 billion in noninterest surplus.
Following development of the medium-term program, the Treasury and Finance Ministry will focus on drawing up the government budget for 2019 and five-year development plan.
As work on the budget has started, the Treasury and Finance Ministry asked government bodies to keep the cost of services to a minimum and adopt policies to eliminate unnecessary expenditures. The schedule for budget negotiations will be submitted to the bodies until Aug. 27. The budget allocated for each ministry will be included in the medium-term program.
Moreover, the 11th Development Program for the period 2019 to 2023 will be published by the end of the year. The plan will include 2023 targets and policies in education, health, economy and judiciary to be implemented in the next five years.
In addition to the medium-term program, development program and budget preparation, Minister Albayrak is scheduled to meet French counterpart Bruno Le Maire on Aug. 27.
On Aug. 10, Albayrak unveiled the new economic approach in a meeting attended by leading Turkish businesspeople. The plan emphasized strong commitment to tight monetary and fiscal policies to ensure economic rebalancing in the short term, emphasized the independence of the Central Bank of the Republic of Turkey (CBRT) and outlined implementation principles for the medium-term program.
Albayrak announced three main phases to achieve the new economic prospective between 2018 and 2023: economic balance for 2018-19, sustainable and healthy growth for 2020-21, and a "fairer share" for 2022-23.
In the first phase, economic rebalance, Turkey will fight inflation, ensure fiscal discipline and lower the current account deficit to provide economic balance, Albayrak said.
Fields of strategic growth will be identified, especially those with value-added, strategic and technological output, in the second phase.
In the third phase covering 2022 and 2023, economic policies will ensure a fairer share of wealth. To that end, the tax system will be simplified, and the government will aim for a productive Turkey.