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Turkey targets tax, price increases to diminish inflationary impact: bankers

Turkish authorities are raising taxes and prices for 2021 only on items that would have a limited impact on inflation, two bankers said on Tuesday.
Inflation ended 2020 above government forecasts at 14.6 percent, mainly due to a sharp decline in the lira and surging food prices. The central bank has lifted its policy rate by 675 basis points in its last two meetings to 17 percent, as it aims to bring inflation down to 9.4 percent by the end of 2021.
Bankers said the government, in a departure from previous years, is hiking taxes and prices on items that account for only a small portion of the inflation basket.
Ankara has recently lowered tax on tobacco products, which account for 5.71 percent of the inflation basket, while increasing tax on alcoholic beverages or highway tolls, which have a much lower weighting, by 17-26 percent.
“We are seeing that the state is moving its price hikes to areas that will not have an impact on inflation,” one banker said, adding that the strategy would support the central bank’s disinflationary policy with only a limited impact on the budget.
A second banker said only the 21.56 percent rise in gross minimum wage this year would increase inflation, while for all other decisions, inflation was the “sole determinant.”
Turkey’s EPDK energy regulator hiked the price of electricity for consumers by around 6 percent, which would add 17 basis points to inflation in January.

BOTAS, Turkey’s state natural gas distribution company, raised the price on natural gas for some users by 1 percent, which would contribute another 2 basis points to inflation.
Inflation is expected to continue rising in the first four months of 2021 but start to decline afterwards. Governor Naci Agbal has said the central bank’s main aim is price stability, and that it will also work to build its reserves transparently.
The bank sold off an estimated $130 billion to stabilize the ailing lira, which ended last year down some 20 percent, leading to a drawdown in net forex reserves.
Data from the central bank showed it had outstanding swap transactions worth a total of $44.04 billion as of Monday.
The bank’s net forex reserves stood at $15.53 billion on December 25, down from $41 billion at end-2019, meaning they are now in deeply negative territory once the outstanding swaps are deducted.
source: Reuters
Image source: Reuters
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Aimed at secondary school students, the event brought together a distinguished group of academic professionals and technology experts to mentor and inspire young participants.
More than 100 high school students from across the Kingdom of Bahrain took part in the hackathon, which featured an intensive programme of training workshops and hands-on sessions. These activities were tailored to enhance participants’ critical thinking, collaborative problem-solving, and team-building capabilities, while also encouraging the development of practical and sustainable solutions to contemporary challenges using modern technological tools.
BENEFIT’s Chief Executive Mr. Abdulwahed AlJanahi, commented: “Our support for this educational hackathon reflects our long-term strategic vision to nurture the talents of emerging national youth and empower the next generation of accomplished female leaders in technology. By fostering creativity and innovation, we aim to contribute meaningfully to Bahrain’s comprehensive development goals and align with the aspirations outlined in the Kingdom’s Vision 2030—an ambition in which BENEFIT plays a central role.”
Professor Riyadh Yousif Hamzah, President of the Royal University for Women, commented: “This initiative reflects our commitment to advancing women in STEM fields. We're cultivating a generation of creative, solution-driven female leaders who will drive national development. Our partnership with BENEFIT exemplifies the powerful synergy between academia and private sector in supporting educational innovation.”
Hanan Abdulla Hasan, Senior Manager, PR & Communication at BENEFIT, said: “We are honoured to collaborate with RUW in supporting this remarkable technology-focused event. It highlights our commitment to social responsibility, and our ongoing efforts to enhance the digital and innovation capabilities of young Bahraini women and foster their ability to harness technological tools in the service of a smarter, more sustainable future.”
For his part, Dr. Humam ElAgha, Acting Dean of the College of Engineering and Technology at the University, said: “BuildHer CityHack 2025 embodies our hands-on approach to education. By tackling real-world problems through creative thinking and sustainable solutions, we're preparing women to thrive in the knowledge economy – a cornerstone of the University's vision.”
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