Turkish Finance Minister Mehmet Simsek on Thursday called on banks to be selective when lending to the private sector to help ease the current account deficit and inflation, and said private banks should no longer focus on consumer loans.
Simsek, addressing the Association of Banks in Turkey, predicted economic growth of about 4.5% this year and reaffirmed that monetary tightening will continue.
“We would like in the coming period for banks to continue their growth in a more selective manner by reducing the current account deficit and lowering inflation,” he said, according to Reuters.
Inflationary pressures are exacerbating again in Turkey, driven by the depreciation of the lira and the increase in taxes, and this comes at a time when the country’s new economic team, which includes Şimşek, is coordinating a radical shift in monetary policy that includes raising interest rates, which is expected to slow domestic demand.
Şimşek said monetary tightening, which comes after years of deep interest rate cuts, will continue to ensure financial stability.
“Despite the difficult global conditions in 2023, we expect a growth of about 4.5 percent,” he added.
Şimşek, who was appointed to the post in June following the May elections, said he expected private banks to be more supportive of the country’s inflation-lowering policies.
“The period when private banks focused on consumer loans should be passed, it is unsustainable,” he added.