Treasury and Finance Minister Mehmet Şimşek on Thursday highlighted what he said was a positive impact of policies implemented by the government on investor confidence, emphasizing the strengthening of reserves and a decline in the country’s risk premium.
Şimşek referred to the official data that on Thursday showed the central bank’s total reserves rose $5.86 billion in the week of Nov. 17 to $134.47 billion, marking the highest level since September 2014.
It marks a continuation of the uptrend since the Central Bank of the Republic of Türkiye (CBRT) adopted more conventional policymaking after the May elections. The reserves are now nearly $36 billion higher than the $98.5 billion level at the end of May following the elections.
Şimşek also noted the significant decline in the cost of insuring government debt against default since after the elections.
“With the policies we have implemented, investor confidence has increased, our reserves have strengthened and the country’s risk premium has decreased,” the minister wrote on the social media platform X, formerly known as Twitter.
“Türkiye’s risk premium, which was over 700 in May, has fallen to the level of 330 today,” he said.
After winning reelection, President Recep Tayyip Erdoğan named a new economic team, including Şimşek as Treasury and Finance minister and former Wall Street banker Hafize Gaye Erkan as CBRT governor.
The new administration reversed a yearslong easing cycle and delivered aggressive monetary tightening in a bid to tackle the country’s long-term inflation issue.
Since June, the central bank has embarked on a 3,150 basis-point tightening cycle – including hikes of 500 basis points in each of the last three months.
Şimşek emphasized the government’s unwavering commitment to reducing inflation, considering it a prerequisite for sustainable growth.
“We are determined to reduce inflation because price stability is a prerequisite for sustainable high growth,” he said.
This commitment reflects a broader strategy aimed at supporting investment, production and exports within the framework of the ongoing disinflationary process, according to the minister.
“In this context, we have strengthened the capital of (Türk) Eximbank and increased the daily rediscount loan limit to TL 3 billion ($103.88 million) 10 times the previous amount, to facilitate exporters’ access to finance,” he noted.
“To encourage export and foreign currency-generating services, we have imposed an upper limit on rediscount loan interest rates, maintaining the discount rate at a maximum of 25.9%.”
Furthermore, Şimşek highlighted the CBRT’s introduction of the YTAK, or investment-committed advance loan, program. The initiative aims to support qualified investments, with a total allocation of TL 300 billion ($10.34 billion) over three years, amounting to an annual limit of TL 100 billion.
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