Turkey 'not indifferent' to inflation, says Deputy PM

By Elif Ferhan Yesilyurt and Ugur Aslanhan

ISTANBUL

Turkey will not allow inflation go up to double digits and stay there as happened in the 1990s, Deputy Prime Minister Mehmet Simsek said on Thursday.

"Inflation has risen to double digits due to the effects of shocks, especially currency shock, increasing oil prices and food prices.

“I want to give a clear message to the market that we care about this problem and we are not indifferent to it.

“We did and will do what is necessary," he told the Global Participation Finance Summit (GPAS) in Istanbul, where Anadolu Agency is global communication partner.

Simsek recalled how Turkey lowered inflation to single digits in a strong struggle at the beginning of the century.

Turkey's annual inflation rose 11.90 percent in October year-on-year, according the Turkish Statistical Institute (TurkStat).

Since the beginning of this year, annual inflation saw its lowest level in January -- 9.22 percent -- but hit its highest level at 11.90 in October.

The highest inflation was seen in transportation prices -- up 16.79 percent -- and food and non-alcoholic beverages which went up 12.74 percent in October, on a yearly basis.

"Price stability, macro financial stability are prerequisite for higher and sustainable growth," Simsek underlined.

According to the Turkey's Central Bank, the inflation rate will fluctuate between 9.3 percent and 10.3 percent through the end of 2017.

The country's medium-term program, which was announced on Sept. 27, set an annual inflation target of five percent in 2020, down from 8.5 percent in 2016.

Participation finance

Simsek also pointed out that Turkey will have an economy of over $5 trillion by 2050.

The country will continue to be one of biggest economies in the world and participation finance could play a significant role in in this success, he said.

Participation banking and finance in Turkey commonly refers to Islamic finance, which requires interest-free lending.

Simsek noted that the government was making efforts to develop participation finance in parallel with the global financial system.

Participation finance is a significant component of the Istanbul Finance Center project and the Interest-free Finance Coordination Committee was established in this context, Simsek added.

The minister said there is great interest in participation finance in Anatolia but its development is slow.

Participation banks should develop new products for improvement of system, Simsek said, adding the state would support such financing.