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(Adds comments on budget, debt, context on crisis and politics)
By Nevzat Devranoglu
ANKARA, July 30 (Reuters) – Turkey's Finance Minister Berat Albayrak said Tuesday he expects further interest rate cuts from the central bank, which should help cut prices. inflation and counter investor concerns regarding government interference.
Albayrak – a week after the Turkish central bank had made a stronger-than-expected rate cut, fueling concerns over its independence – said the bank was making decisions based on data sets and had entered an era of easing.
At a rare press conference, the minister also acknowledged that the budget deficit would be higher than the end-of-the-year goal (less than 3%) and predicted, unlike many economists that the economy hit by the recession would register positive growth in 2019.
The Turkish economy has entered the recession after last year's monetary crisis, the worst of all two decades and inflation exceeding 25%.
The central bank reacted with an aggressive tightening of monetary policy, which remained in effect until Thursday, when it lowered its policy rate to 19.75%, instead of 24%, and opened the way to an increase.
"With the serious easing of interest rates in Turkey over the recent period, and based on the fact that the trend of interest rates will decline more clearly and more strongly over the coming period, we have entered a period of reduced interest rates, "said Albayrak. , Son-in-law of Turkish President Tayyip Erdogan.
"We have to express this here: the central bank makes its decisions on monetary policy and interest rates based on its data."
The rate cut was the largest recorded by Turkey since at least 2003, and it was the first political decision made by the new governor of the bank, Murat Uysal, who took the reins after Erdogan dismissed him from office. former governor, Murat Cetinkaya, three weeks ago.
Erdogan, who has long called for lower rates, said he made the decision because Cetinkaya had not followed the instructions.
At the height of last year's crisis, the government announced a target of a fiscal deficit / GDP ratio of 1.9%. Albayrak said Tuesday that even though it would increase this year, debt levels are not a problem for Ankara.
One of the worst hangovers in the crisis is the debt of up to $ 20 billion that companies in the energy and construction sector can no longer afford to pay, which is largely in the balance sheet of Turkish banks.
Earlier this month, Reuters announced that debt relief efforts have stalled after the suspension of initial restructuring plans.
Albayrak said the government will not make up for the losses. "The private sector will lead this process on its own. "The government should do it, make up for the losses," he said. "We will also support requests from all sectors." (Report by Nevzat Devranoglu, Additional reports by Ali Kucukgocmen, Ezgi Erkoyun, Can Sezer, Ebru Tuncay, Behiye, Selin Taner and Ceyda Caglayan in Istanbul, written by Jonathan Spicer, edited by Dominic Evans)
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