Minister of Treasury and Finance, Mehmet Şimşek, mentioned that they anticipate inflation to decrease to 24% this year. Minister Şimşek stated that an increase in housing supply will be implemented to prevent rises in rental prices, declaring, “Within a couple of years, we will embark on a significant social housing initiative.” Additionally, Minister Şimşek acknowledged the validity of citizens’ complaints about the high cost of living, reassuring them by saying, “Our citizens can rest assured, we are pursuing a lasting solution. Fighting against inflation takes time, as seen globally.”

Minister Şimşek made significant statements during his participation in a Tv100 broadcast. Assessing the inflation rate declared as 5.03% in January, Minister Şimşek articulated, “The inflation of 5% in the first month of the year sparked discussions. This January’s inflation rate is the lowest in the first months of the past 4 years.”

Minister Şimşek mentioned their prediction of inflation dropping to 24% this year. Emphasizing that the decrease in inflation should not be interpreted merely as falling prices, but as a slowdown in the rate of price increases, Minister Şimşek added, “The drop in inflation will persist. January’s inflation did not impact our structure regarding battling inflation,” he explained. “MAKING A SERIOUS EFFORT TO INCREASE HOUSING SUPPLY” “The high cost of living is the most critical economic issue Turkey faces,” said Minister Şimşek, further explaining, “Approximately 82.7% of our population resides in urban areas. I believe the most important component of the high cost of living is rent here. The homeownership rate is around 56%. Due to recent rapid increases in housing prices and rents, citizens are primarily affected by rental costs when referring to the high cost of living. We are making a serious effort to increase housing supply. Besides the ongoing construction in earthquake-prone regions, we provide substantial budget support for social housing, urban renewal, and transformation. I firmly believe that within a couple of years, we will initiate a significant social housing initiative. We are talking about homes supported by the state and easily accessible to our citizens. This is one of the most crucial aspects of our fight against inflation,” he stated. “PURSUING A FUNDAMENTAL SOLUTION” Minister Şimşek highlighted, “Our citizens are justified in complaining about the high cost of living. Inflation is an unjust tax that particularly impacts those with fixed and low incomes. Inflation is the worst evil. It must be combated without fail. Our citizens can rest assured, we are seeking a fundamental solution. The battle against inflation takes time on a global scale. After the pandemic, Europe and America also saw an increase in inflation. It took them over 3 years to reduce their inflation from around 9-10% to 2-3%. Our disinflation program started in the second half of 2023, and has not yet completed 2 years. The decline in inflation will continue,” he stated.

ENDING THE KKM PROGRAM FOR LEGAL ENTITIES Asserting their determination to exit the foreign currency-indexed deposit account (KKM), Şimşek stated, “The KKM, which rose to 3.4 trillion lira in August 2023, is currently below 1 trillion lira. In terms of dollars, it dropped from over 144 billion dollars to below 30 billion dollars. Less than one-third of this total belongs to companies, or legal entities. The remaining portion pertains to individuals. Considering the perspective provided by our Central Bank, we will likely terminate this program regarding legal entities in the first half of this year.” Şimşek highlighted that the KKM has been declining for 76 weeks, mentioning that steps could be taken even now if desired, but they preferred a smooth transition.

ASSESSMENT OF TRUMP’S NEW TERM Regarding the absence of a free trade agreement between Turkey and the U.S., Minister Şimşek relayed concerns about certain practices of the new U.S. administration causing uncertainty and anxiety. However, he emphasized that the direct risks for Turkey are very low, almost negligible. Şimşek pointed out that increasing customs tariffs by the U.S. may have indirect effects, adding, “So far, the announced tariff increase against China is not overly dramatic. It will not have significant consequences. What does remain? There are steps that could be taken based on political considerations. The dialogue and relations between our President and the U.S. President are good. I do not believe there will be special protectionist measures in trade against Turkey. We have sensitivities regarding Syria. The messages received so far have been relatively constructive. We are hopeful in that regard.” “EVERY TAXPAYER WILL BE SUBJECT TO INSPECTION” Expressing their objective to announce that “by 2025, there will be no taxpayer left untouched,” in the fight against tax evasion, Minister Şimşek stated, “We will go after large taxpayers as well as all other taxpayers engaged in informal activities. We are conducting analyses and cross-checks. Yet, the most important feature of this period is our continuous presence in the field. Around 2.2 million inspections were conducted in 2024, corresponding to approximately 1.2 million. We aim to increase this in 2025.” Regarding the application to ensure rental contracts are made electronically through e-Government, Şimşek mentioned that over 11,600 rental contracts have been digitalized, and more than 38,000 tenants filled out forms via the Revenue Administration Presidency’s website. He stressed, “If landlords do not voluntarily submit declarations, we will not only review the 2024 rent but will also look into the past 5 years.”