IMF Executive Board Concludes 2025 Article IV Consultation With Türkiye.

Washington DC; February 2026: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Türkiye.

Since the 2024 Article IV, Turkiye’s disinflation program has shown successes. Inflation fell from 49.4% (Year-Over-Year) in September 2024 to 30.9% in December 2025 on the back of strong fiscal consolidation, prudent income policies, and a tight monetary policy stance. Following a temporary deceleration in mid-2024, GDP growth has remained strong, forecast at 4.1% in 2025. Lira demand has strengthened, bolstering international reserves, and the current account deficit remains adequately financed.

The current policy mix continues to balance disinflation with steady growth. Tight monetary policy, moderate wage growth, and broadly neutral fiscal policy are expected to support gradual disinflation. End-2026 inflation is expected at 23% (Year-Over-Year), as domestic demand remains strong. Boosted by further policy rate cuts and rising confidence, growth is expected at 4.2% for 2026. The current account deficit would remain adequately financed, while depositor confidence and strong gold prices would allow reserves to stay at around 80% of the IMF’s adequacy metric.

While growth should remain solid and inflation will fall, this approach bears risks and costs. External risks remain elevated due to persistent global trade uncertainty and regional conflicts. The materialisation of an adverse shock, like an increase of energy prices or a negative weather event, could further extend the period of still-high inflation. Moreover, the gradual approach to disinflation has weighed on the financial sector and slowed productivity growth.

Executive Board Assessment –

Executive Directors commended the authorities for the important successes of their disinflation policies, which have reduced macroeconomic imbalances and improved confidence while preserving solid growth. Noting that inflation remains well above target and the economy is highly vulnerable to shocks, the directors have stressed the need for a tighter macroeconomic policy mix combined with ambitious structural reforms to entrench disinflation, further strengthen external buffers, and support inclusive medium-term growth.

Directors commended the authorities for their strong fiscal effort in 2025. They noted that continued tightening, bringing the budget deficit temporarily below the 03% medium-term target, is needed to support disinflation. Directors emphasised the role of measures to broaden the tax base and improve compliance, together with further efforts to streamline expenditures through phasing out energy subsidies. They called for carefully sequenced and well communicated measures to minimise second-round inflationary impacts while mitigating the impact on vulnerable households. As fiscal space expands, additional resources could be redirected to social priorities. IMF Directors have also supported full alignment of wage policies with inflation targets, as well as stronger oversight of PPPs and SOEs.

Directors generally called for tighter monetary policy to achieve decisive disinflation, while emphasising the need for policy rate adjustments to remain data dependent and mindful of their macro-financial implications. To bolster policy credibility and strengthen transmission, Directors emphasised the importance of a simplified monetary policy framework firmly centered on the policy rate, with enhanced central bank independence and communication. Directors recommended limiting FX interventions to smoothing volatility, while gradually allowing greater exchange rate flexibility as inflation expectations become better anchored and reserve buffers recover.

Directors noted that the financial sector remains robust, supported by the authorities’ swift and effective response to market stress. They stressed that continued vigilance is warranted, particularly for still high FX liquidity risks. Directors supported ongoing efforts to strengthen the supervisory and resolution frameworks along with enhanced oversight, including of crypto assets.

Directors urged structural reforms to foster productivity, resilience, and medium-term growth. Top priorities include improvements in labour, education, and governance and legal frameworks, support for SMEs, and raising the share of renewables in the energy mix.

Türkiye: Selected Economic Indicators, 2021−31: Population as of 2024 is85.7 million; The Per Capita GDP as of 2024 is US$ 15,882; Quota SDR is 4658.60 million.

Team Maverick.