World Bank says Türkiye’s inflation fight should be recognized

The World Bank on Thursday stressed Türkiye’s progress and said the efforts made by its central bank and Treasury and Finance Ministry to tackle inflation are worthy of recognition.

“I think the efforts that have been made by the economic team, both the central bank and the Ministry of Finance, have to be recognized, as they have been tackling inflation,” Humberto Lopez, World Bank’s director for Türkiye, said.

Inflation reached an annual 75% in May, which is said to mark the peak before tight policy and a relatively stable Turkish lira bring relief.

Authorities reversed years of loose monetary policy after last year’s general and presidential elections and delivered a series of interest rate hikes to combat inflation.

Since June last year, the Central Bank of the Republic of Türkiye (CBRT) has gradually lifted its benchmark policy rate to 50% from 8.5% and has pledged to tighten it more if there is “a significant and persistent deterioration” in the inflation outlook.

Lopez noted that Türkiye has strong infrastructure and human capital, and despite potential issues down the line, the outlook appears positive.

He stated that the World Bank’s executive board held a meeting this April where they discussed a new strategy for the fiscal year.

“We are proposing, for the initial three years, a (finance) package of $18 billion, that is on top of what we have in this moment, which is $17 billion,” Lopez said.

“Of the $18 billion we are proposing, $12 billion will be directed to the private sector, $6 billion will be directed to the public sector,” he added.