ANKARA (Reuters) - Turkey’s government will prioritise the economy, including bringing down inflation and unemployment, and will not take tax measures that could further stoke consumer price growth, Finance Minister Naci Agbal told Reuters on Tuesday.
Speaking two days after Turks voted by a narrow margin to change the constitution and hand President Tayyip Erdogan sweeping new powers, Agbal said government incentives are designed to boost the private sector, and that the ruling AK Party does not want public sector-driven economic growth.
“The economy will be the No.1 item on the agenda. At the point where we are, bringing down inflation and unemployment are among the important priorities,” Agbal said.
“We do not desire a growth outlook through the work and spending of the public sector. If growth is going to head towards the target, let’s achieve growth with temporary or lasting support solely to private sector investment and production.”
Erdogan declared victory in the referendum on Sunday, after unofficial results showed 51.5 percent of voters had backed the constitutional changes to replace Turkey’s parliamentary system with an all-powerful presidency and abolish the office of prime minister. The main opposition said the vote as marred by irregularities and they would challenge its result.
The AKP has said that victory for the referendum would allow the government to quickly roll out investor-friendly structural reforms - such as to the labour market and the tax code - but investors have been skeptical, seeing the likelihood of more delays and policy gridlock.
While the government wants to boost growth - economic expansion cooled to 2.9 percent last year, from a revised 6.06 percent a year earlier, hit by aftershocks from the July 15 failed coup - it also wants to keep prices in check.
Inflation soared to an 8-1/2 year high of 11.29 percent in March, as chronic weakness in the lira currency stoked a surge in consumer prices.
Erdogan has responded by declaring himself an “enemy” of interest rates and saying that high interest rates are the cause of inflation, a stance at odds with orthodox economics.
Reporting by Orhan Coskun; Writing by Daren Butler and David Dolan; Editing by Isabel Coles