EXCLUSIVE-Turkish vice president Yilmaz sees inflation reprieve, with full Erdogan backing

Turkish Vice President Cevdet Yilmaz expects savings from the government's new efficiency plan to outstrip estimates as it continues the fight against inflation this summer with the full backing of President Tayyip Erdogan, he told Reuters on Thursday. Yilmaz said he expects an international crime watchdog to remove Turkey's "grey-listing" next month.

Turkish Vice President Cevdet Yilmaz expects savings from the government's new efficiency plan to outstrip estimates as it continues the fight against inflation this summer with the full backing of President Tayyip Erdogan, he told Reuters on Thursday.

Yilmaz said he expects an international crime watchdog to remove Turkey's "grey-listing" next month. Not upgrading Turkey in June would amount to a political decision by the Financial Action Task Force, he said. Yilmaz, who over the last year has spearheaded a dramatic U-turn toward a more orthodox economic policy, predicted that summer price relief would help convince sceptical Turks that inflation is dipping after years of soaring prices.

To bolster the central bank's aggressive interest rate hikes, Yilmaz and Finance Minister Mehmet Simsek unveiled a "savings and productivity" plan on Monday focused on pausing construction of most new state buildings and public institutions' purchase of vehicles for three years. Though they did not outline expected budget savings, some analysts said it could amount to roughly 100 billion Turkish lira ($3.1 billion).

"It looks like it will be far above that," Yilmaz said of the estimate, speaking in his office at the Presidential Palace in Ankara. "We believe we will experience a serious break in inflation especially in the summer period this year," he said.

"The improvements in certain issues that affect daily life will positively impact our citizens' perception," and "create a different psychology in terms of inflation expectations." ($1 = 32.1970 liras)