Turkish Finance Minister Minister Şimşek: “We Are in the Final Stage of the Agreement with the UK”
Finance Minister Mehmet Şimşek stated in a speech in London that despite earthquake-related expenditures, Turkiye has restored fiscal discipline and reduced the ratio of expenditures covered by the savings decree from 4.6% of the budget to 3%.
Minister Şimşek emphasized that fiscal discipline has been re-established despite the scale of earthquake spending:
“We have put our budget back in order. Budget deficits are a major challenge globally, yet Turkey faced a major test with the February 6 earthquake. We have spent approximately 90 billion dollars in the earthquake region so far. The public sector has ensured significant discipline in spending. The expenditures covered by the savings decree used to account for 4.6% of the budget; now we have reduced it to 3%, which means a reduction of around 30% in budget terms. At the same time, we are meeting the needs of our citizens. We have brought the budget to where we wanted it to be. We will allocate the fiscal space created to infrastructure, productive areas, and improving citizens’ access to higher-quality public services.”
Sending a strong message of determination in the fight against inflation, Şimşek said inflation will fall to around 31% this year.
“Our priority is to ensure price stability — that is, to bring inflation back to single digits. We have made significant progress. This year it will fall to around 31%. Next year, we aim to bring it below 20%, and the year after that to single digits.”
“Global Debt Levels Are High”
Şimşek highlighted that global indebtedness is at a historic peak, whereas Turkiye’s public debt remains low compared to the world:
“In emerging markets, the debt-to-GDP ratio is over 240%. In Turkiye, total indebtedness is 89%, and public debt is around 25%. These ratios are even lower than many emerging markets by half. This gives us significant flexibility in transformation-related investments.”
Stating that the current account balance has shown strong improvement over the past two years, Şimşek noted that excluding gold, Turkiye posted a surplus last year:
“We reduced the current account deficit from around 4% to the 1–1.5% range. This, along with falling inflation, has improved our risk premium. Turkiye’s risk premium declined from 700 basis points in mid-2023 to below 240. We are making strong progress, but there is still much more to do.”
“We Are More Resilient”
According to reporting by CNBCE, Şimşek said Turkey’s relative advantage against global disruptions has increased.
“Major geopolitical competition lies behind global fractures. Türkiye is in an advantageous position here. Sixty-two percent of our trade is with countries with which we have free trade agreements, and more than 80% is with these countries plus our broader region. We are neither indifferent to developments nor fully insulated, but Türkiye is comparatively more resilient to these disruptions.”
Emphasizing regional integration, Şimşek stated:
“If stability, peace, and prosperity increase in our region, Türkiye will be the country that benefits the most. Between China and Italy, the strongest industrial base is ours. We rank among the world’s top five in tourism, and in global construction we are second only to China.”
“Our Demographic Advantage Will Last Another 18–20 Years”
Şimşek pointed out that while the global population is aging rapidly, Turkey maintains a favorable position thanks to its young population:
“The silver economy created by aging populations has turned into a 5.5-trillion-dollar market. Türkiye also holds a strong position here.”
“There Is No Need for Pessimism if We Are Prepared”
Highlighting that Türkiye is conducting 1,400 active defense industry projects and that R&D value has reached 100 billion dollars, Şimşek said Turkey is now an exporter rather than an importer in this field.
“Defense industry spending was around 1.2 trillion 25 years ago; it will likely exceed 6 trillion dollars in the 2030s. There is no reason for pessimism if we are prepared.”
“Green Transition Is Not a Choice but a Necessity”
Şimşek noted that climate change directly affects Türkiye, recalling that this year the country experienced both severe agricultural frost and drought simultaneously. He underlined that the green transition must be prioritized:
“In the past 24 years, we paid 1 trillion dollars for fossil fuel imports. We spent twice our total debt on fossil fuel imports. For us, the green transition is not a preference but an obligation.”
He stated that 45% of Türkiye’s electricity production and 62% of its installed capacity come from renewable sources, adding that the goal is to generate at least two-thirds of energy from renewables.
“We Are in the Final Stage of the Agreement with the UK”
Şimşek announced that Türkiye and the UK have reached the “final stage” of negotiations for a comprehensive Free Trade Agreement:
“It will include not only industrial goods but also services, agriculture, and public procurement.”
He also noted that trade volume with the EU will exceed 230 billion dollars this year:
“We are the EU’s fifth-largest trading partner outside the bloc. If the Customs Union is expanded, our trade volume could reach 400 billion dollars within ten years.”
“2026 Will Be a Year of Reform”
Concluding his speech with the reform agenda, Şimşek said preparations for second- and third-generation reforms are ongoing:
“Structural reforms are essential for making our gains permanent. As our President has stated, 2026 will be a year of reform. This year, our country will likely enter the high-income group according to the World Bank’s classification.”