FX.co ★ Turkey's authorities take austerity measures to combat inflation

Turkish officials have made a surprising decision. They are ready to stop renting new buildings and vehicles to fight soaring inflation. These measures are expected to support the Turkish economy.

According to Turkey’s Treasury and Finance Minister Mehmet Şimşek, the government will not rent new buildings or vehicles for three years. This decision is part of measures to combat rising prices. It is anticipated that these steps will lead to significant savings in government institutions and improve the country's economic situation in the long term.

Şimşek believes this approach to fighting inflation is suitable for stable conditions. However, it will be canceled in case of an earthquake threat. For other situations, “standardized square meter allocations will be introduced for government premises, and existing buildings will be assessed for efficient utilization.” The ministry will assess how effectively the state-owned organizations use buildings and the necessity of maintaining foreign representative offices of Turkish ministries.

Savings will also affect wages. The Turkish authorities plan to set a salary cap for board members of government institutions. Regarding hiring new employees, the public sector will only make new hires to replace retiring staff. Additionally, government investments are expected to be cut by 15%, and the documentation system will be moved to digital. Experts believe these measures could save about 100 billion lira ($3.1 billion at the current exchange rate).

Notably, in April, Turkey's annual inflation rate soared to nearly 70%, the highest level since November 2022. Two years ago, inflation reached an impressive 84.39%. Meanwhile, Turkish citizens estimate the annual inflation rate at 96%, and independent economists at Turkey's Inflation Research Group (ENAG) suppose it to be at 127.21%.