Şimşek: Inflation to End 2024 at 20% Range, Record Agricultural Credit Support Planned

Turkish Treasury and Finance Minister Mehmet Şimşek stated that while headline inflation currently stands around 35%, the government aims to close the year at 20% levels. Speaking at the 4th Agricultural Ecosystem Meeting organized by Ziraat Bank at Istanbul’s Haliç Congress Center, Şimşek shared the government’s economic outlook and comprehensive agricultural support plans for 2025.

Headline Inflation Falls, Year-End Target: 20%

“As of May, annual inflation hit the lowest level in the past 3.5 years,” Şimşek noted. “Inflation in core goods dropped to around 20%, and we believe we’ll close the year in the 20s.”

According to Şimşek, disinflation has been ongoing for over a year. He emphasized that inflation expectations among households are also improving, driven by a combination of fiscal, monetary, and structural measures—especially housing supply increases in earthquake-hit regions and subsidies for energy and food security.

700 Billion Lira in Subsidized Loans for 1.2 Million Farmers

Şimşek highlighted food security as the government’s top priority, revealing a ₺706 billion agricultural support package for 2025:

• ₺700 billion in subsidized credit to be extended to 1.2 million farmers

• The Treasury will cover 70% of the loan interest costs

• Ziraat Bank will continue serving as the main credit channel

In parallel, artisans and exporters will benefit from similar subsidies, with the state covering 50% of interest costs on commercial loans.

High-Tech Investment Loans at One-Third the Market Rate

In line with President Erdoğan’s economic strategy, Şimşek announced low-cost financing for production in 284 medium-to-high-tech sectors where Turkey faces a supply deficit.

“We offer loans with interest as low as one-third of market rates to boost investment in strategic industries,” he said.

Additionally, removing VAT on feed and fertilizer has cost the government ₺115 billion this year alone, while 70% of agricultural insurance premiums under TARSİM are subsidized—though only 30% of farmers currently utilize this option.

Housing and Energy Subsidies to Combat Cost of Living

Şimşek stressed the importance of increasing social housing to manage inflation:

“Rent is one of the biggest components of living costs. With 28% of households renting, our social housing campaign is vital.”

On energy affordability, the state now subsidizes 55% of electricity and 65% of natural gas bills for households.

Turkey Narrows Current Account Deficit, Lowers Risk Premium

Şimşek also highlighted macroeconomic improvements:

• Current account deficit fell to 1–1.5% of GDP over two years

• FX reserves have increased again

• Turkey’s risk premium has declined, signaling easing financial conditions ahead

He concluded by emphasizing Turkey’s ambition to generate current account surpluses through industrial, agricultural, digital, and green transformation strategies.

“We’re emerging as the region’s leading production hub, from manufacturing to agriculture and services,” Şimşek said. “Turkey is set to positively diverge from other emerging markets.”