Turkish Finance Ministry announces comprehensive public savings measures

Turkish Finance Minister Mehmet Şimşek has announced the long-awaited “savings and efficiency package in the public sector” aiming to curb the budget deficit. Accordingly, no new vehicle and building purchases/rentals will be made, and new personnel will be recruited to the public sector as much as the retired ones for three years.

Monday May 13 2024 03:16 pm

Turkey's Vice President Cevdet Yılmaz (R) and Finance Minister Mehmet Şimşek (L) attend a press conference to unveil a savings measures package in Ankara, May 13. REUTERS/Umit Bektas

Duvar English

Turkish Finance and Treasury Minister Mehmet Şimşek and Vice President Cevdet Yılmaz on May 13 announced the “savings and efficiency package in the public sector.”

Şimşek stated that the new measures aimed to “eliminate the cost of living and reduce inflation to single digits.” According to the latest data from Turkey's official statistical institution, the country's annual inflation rate increased to 69.8% in April while the central bank raised its year-end inflation forecast to 38 percent.

"With fiscal discipline, we will allocate more resources to natural disasters, green and digital transformation. We will ensure that our country borrows at more reasonable costs by reducing the country risk premium, and we will improve intergenerational justice by borrowing less," Şimşek explained.

The minister noted that the measures would be applied to eight priority areas in public spending such as vehicles, buildings, public employment, efficiency in administrative structuring, overseas temporary assignment expenses, energy and waste management, communication expenses, and other current expenses.

What will be cut?

“Except for compulsory needs in areas such as ambulances, defense, and security, we suspend the purchase and leasing of new vehicles in the public sector for three years,” Şimşek announced.

The minister also stated that the provision of personnel shuttle services would be terminated "in places with public transport,” except for those working in the defense and security areas.

The minister also announced a ban on the use of foreign-made vehicles, except for those authorized by law.

Şimşek stated that for the next three years, the purchase and construction of new service buildings would be halted. He emphasized that new buildings would not be rented, and there would be a prohibition on the purchase/construction of new lodging and social facilities. Existing facilities “will be repurposed and integrated into the economy.”

Speaking about the number of personnel in the public sector, Şimşek said, "For three years, new personnel will be recruited to the public sector as much as those who retire. The number of support staff will be reduced. Flexible and remote working models will be developed."

As per the new measures, the salaries of public employees serving on the board of directors will be restricted. Each public employee will be permitted to receive a board salary from only one position, with an upper limit imposed on wages.

Şimşek added, "All provincial organizations will be reviewed on the basis of efficiency. In-service training, meetings, etc. will be held in public facilities. Temporary assignments abroad will be limited."

Şimşek also announced plans for the implementation of a comprehensive electronic system, which will encompass correspondence within institutions and distribution of institutional reports.

Representation and promotion allowances will be cut by 25 percent, and activities such as trips, cocktails, dinners, etc. will not be organized except for international meetings and national holidays.

Giveaway gifts will be banned. Purchases of inventory will be suspended for three years. There will be a 10 percent cut in goods and service purchase and a 15 percent cut in investment.

Investment projects with physical progress above 75 percent, projects against earthquake risk, projects planned in the earthquake zone, projects that increase food supply, green and digital transformation, and port-railway connection projects near industrial zones will be prioritized.

"The savings package will be monitored by the Treasury and Finance Ministry and the local administrations. All public employees must comply without exception. While the monitoring, auditing, and reporting will be carried out, administrative sanctions and fines will be imposed,” Şimşek underscored.

CHP accuses gov't of applying 'disguised IMF program'

Reacting to the newly announced savings package, the main opposition Republican People's Party (CHP) leader Özgür Özel said, "This is a disguised International Monetary Fund (IMF) program. If you introduce IMF, no new public personnel will be hired, workers will not be given a raise, pensioners will not be given a raise, flexible working models will be developed anyway."

"Let cuts to be directed a little bit towards employers, the rich, those who add wealth to their fortunes with FX-protected deposit scheme," Özel said:

The CHP Chair stated that tens of thousands of teachers have been awaiting appointment to the public schools as well as new graduates in other areas. He noted that even though they support curbing extravagant spending, they are on the side of the workers against "models that will exploit labor" and called for an establishment of a fair tax system.

CHP deputy Cevdet Akay noted that public savings cannot be achieved with these measures, "which correspond to only three per cent of the budget deficit," noted, "As long as you do not cut the transfer of resources to crony companies, continue providing tax amnesties and pouring incentives, you cannot talk about savings."