What is the MTP, what is the content of the Medium Term Program?

Prepared by the Ministry of Treasury and Finance and the Strategy and Budget Directorate, MTP stands for Medium Term Program. With the Medium Term Program (MTP), targets are set for the levels of basic macroeconomic data such as inflation, national income, growth and unemployment in the 2024-2026 range.

The three-year Medium Term Program (MTP) covering the 2024-2026 period, which includes economic targets and policies, has been announced. In the MTP, growth, inflation, national income, unemployment and dollarThere are estimations such as /TL level.

WHAT IS OVP?

The Medium Term Program (MTP) is a three-year program that determines the economic, social and environmental goals of the Republic of Turkey and sets out the policies to be followed to achieve these goals.

The main purpose of the MTP is to ensure the sustainable and inclusive growth of the Turkish economy. In this direction, the OVP has set the following objectives:

Ensuring and sustaining economic growth

Lowering inflation to single digits

Increasing employment

reduce poverty

Increasing access to education and health services

Protect the environment

WHAT IS THE MEDIUM TERM PROGRAM CONTENT?

The Medium Term Program (MTP), which includes the economic targets for the next three years, has been announced. Its content is as follows…

INFLATION AND GROWTH FORECAST

According to the OVP, inflation was estimated as 65 percent for 2023, 33 percent for 2024, 15.2 percent for 2025, and 8.5 percent for 2026.

The growth forecast in MTP was 4.4 percent for 2023, 4 percent for 2024, 4.5 percent for 2025 and 5 percent for 2026.

TAX REVENUES AND BUDGET DEFICIT ESTIMATE

Tax revenues were estimated as 4 trillion 270 billion TL for 2023, 7 trillion 407 billion TL for 2024, 9 trillion 523 billion TL for 2025 and 11 trillion 349 billion TL for 2026.

The budget deficit was estimated as 1.6 trillion TL for 2023, 2.65 trillion TL for 2024, 1.82 trillion TL for 2025 and 1.82 trillion TL for 2026.

The unemployment forecast was 10.1 percent for 2023, 10.3 percent for 2024, 9.9 percent for 2025, and 9.3 percent for 2026.

DOLLAR/TL FORECAST

In the MTP, the Gross Domestic Product (GYSH) targets in TL were announced as 25 trillion 483 billion TL for 2023, 41 trillion 159 billion TL for 2024, 52 trillion 942 billion TL for 2025 and 62 trillion 997 billion TL for 2026.

The Gross Domestic Product (GDP) is targeted to be 1 trillion 67 billion dollars in dollars for 2023. It is targeted that the GDP will be 1 trillion 119 billion dollars in 2024, 1 trillion 2025 dollars in 2025, and 1 trillion 318 billion dollars in 2026.

Thus, according to the OVP, annual average dollar/TL rate estimates have also emerged. The annual average dollar/TL rate is projected to be 23.88 for 2023, 36.78 for 2024 with an annual increase of 54 percent, 43.93 for 2025 with an annual increase of 19.4 percent, and 47.79 for 2026 with an annual increase of 8.8 percent.

When the average exchange rate is calculated to be 21.59 in 2023, it is predicted that the year-end dollar/TL exchange rate required to reach 23.88 in the remainder of the year will be 30.40.

In addition, it is predicted that this year’s per capita income will be 12 thousand 415 dollars. Income per capita is predicted to be 12,875 dollars in 2024 and 13,717 dollars in 2025.

CURRENT DEFICIT, EXPORT AND TOURISM REVENUES

Turkey’s tourism income is targeted to be 55.6 billion dollars in 2023, 59.6 billion dollars in 2024, 64.7 billion dollars in 2025 and 71.3 billion dollars in 2026.

The export forecast in the OVP was 255 billion dollars for 2023, 267 billion dollars for 2024, 283.6 billion dollars for 2025, and 302.2 billion dollars for 2026.

The import forecast in the OVP was 367 billion dollars for 2023, 372.8 billion dollars for 2024, 388.9 billion dollars for 2025 and 414 billion dollars for 2026.

While the current account deficit is expected to be 42.5 billion dollars in 2023, it is expected to be 34.7 billion dollars in 2024, 31.7 billion dollars in 2025 and 30 billion dollars in 2026.

STRUCTURAL REFORMS ADDED

Vice President Cevdet Yılmaz stated that they included structural reforms in the program. Yılmaz said, “It is aimed to ensure macroeconomic and financial stability and to reduce inflation to single digits”.

Yılmaz also said, “We will continue the monetary policy with an updated version according to the needs of the period. Our central bank will also do what is necessary within the scope of instrument independence.”

EXPLANATIONS FROM ERDOĞAN

After the statements of Cevdet Yılmaz, the President Recep Tayyip Erdogan He also talked about OVP.

In his speech, Erdoğan reversed the ‘Interest cause, inflation result’ thesis that he had been defending for years by saying, “With the support of the tight monetary policy, we will reduce inflation to single digits again and improve the current account balance.”

The highlights of Erdogan’s speech are as follows:

* We never ignore the earthquake that occurred on February 6 in our economic plans.

* The earthquake disaster, which cost our country’s economy 104 billion dollars, aggravates our burden and complicates our struggle.

* We achieved a growth rate of 3.9 percent in the first half of 2023, increasing our growth performance to 12 quarters without interruption. On an annual basis, we have been growing continuously for 13 years.

* We have succeeded in bringing our economy to an economic size exceeding 1 trillion dollars for the first time on an annual basis.

* Thus, we ensured that the negative effects of the earthquake on economic activities were limited.

* We achieved 165 billion dollars in exports in the first 8 months of the year, and 253.5 billion dollars on an annual basis. We are having a much better season in tourism than the previous year. There is no loss in employment either.

* In the first 6 months of the year, we provided a net employment increase of 220 thousand despite the regulations regarding the conditions for entitlement to retirement and the negative impact of the earthquake.

‘INFLATION IS OUR PROBLEM’

* Inflation, which has reached the peaks of the last 60-70 years in the world, is naturally our problem.

* In the fight against inflation, we have taken some additional measures in addition to the subsidies we have implemented in energy prices, especially natural gas, and the ceiling price application on rent prices.

* Controls against opportunists and greedy people continue to increase. We are witnessing that the price bubble in some sectors decreases and the market finds its balance.

ERDOĞAN CHANGED THE OPINION ON INTERESTS

* Our Central Bank reserves continue their strong course at 117.3 billion dollars.

* Our country has a very low risk of household indebtedness compared to the average of developing countries.

* We have identified priority reform areas in 7 basic areas.

* We will definitely not compromise on economic growth.

* With the support of tight monetary policy, we will reduce inflation to single digits and improve the current account balance.

INFLATION EXPLANATION

* With the policy basket implemented in the MTP, we will remove the inflation problem from our country’s agenda.

* We will prevent consumption increases that feed inflation.

* With growth policies based on investment, production, employment and exports, we will provide financing opportunities that support the real sector with a focus on price stability.

* In order to ensure stability in food prices and security of supply, we will determine the adequacy ratios in strategic agricultural products and make production planning.

* We are accelerating investments to establish a greenhouse organized agriculture zone in order to minimize seasonality in fresh vegetables and fruits.

‘KKM FULFILLED ITS FUNCTION’

* Our Currency Protected Deposit system has fulfilled its duty and made a significant contribution to ensuring exchange rate stability.

* We will pave the way for our currency-protected deposits to be converted into TL deposits on a ground where exchange rate stability is consolidated.

* Our central bank will support our investments without compromising the stance required by the monetary policy with the investment committed advance loan that we will update according to the new conditions.