Turkey’s budget deficit rises 824 percent to $4.35 billion in February
Posted by meb at March 22nd, 2009
The Turkish government’s budget deficit rose to 7.4 billion TL ($4.35 billion) in February 2009, revealing a sharp 824 percent jump compared to the same month of 2008, the Finance Ministry announced on Friday.
The budget deficit registered in the same month of 2008 was 1.02 billion Turkish lira (TL) ($600 million).
Budget spending totaled 25.8 billion TL ($15.1 billion) in February, while the budgetary income was 18.4 billion TL ($10.8 billion), the ministry said.
The decline in tax collection due to a slowing economy and an increase in government spending led to the sharp rise in the deficit, the analysts said.
Government sources told Reuters recently that tax revenue losses will amount to 30 billion TL ($17.6 billion) in 2009 if growth is flat, while tax losses will not be less than 40 billion TL ($23.5 billion) and could grow as high as 50 billion TL ($29.4 billion) if the economy shrinks 1-2 percent.
The International Monetary Fund expects the Turkish economy to shrink 1.5 percent this year, but economists say it may contract as much as 7 percent.
Turkey’s once booming economy has slowed sharply with unemployment rising to an all-time high, prompting the government to cut tax rates for cars, household durables and home purchases ahead of local elections on March 29.
The data showed budget expenditure jumped 35.5 percent year-on-year in the first two months of the year.
With these figures, the 10.4 billion TL ($6.1 billion) yearly budget deficit expected for 2009 was reached in the very first two months of the year, with a total 10.3 billion TL ($6 billion) recorded.
PRIMARY SURPLUS FALLS
Primary surplus, which excludes interest payments on government debt, stood at 2.4 billion TL ($1.4 billion) in February, falling from a surplus of 5.7 billion TL ($3.3 billion) in the same month of 2008.
The Turkish government set the primary surplus target at 2.41 percent of the gross domestic product for 2009, based on the assumption that the Turkish economy will grow by 4 percent this year.
The Finance Ministry said a rise in interest payments was a major reason for the surge in the budget deficit.
“Interest payments rose to 9.8 billion TL ($5.7 billion) this year compared to 4.7 billion TL ($2.7 billion) in the same period last year. Interest payments constituted 38 percent of total budget expenditure in February 2009,” the ministry said.
source: Hurriyet daily news
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