The Turkish government’s budget deficit contracted by 7% y/y to TRY6bn (€891mn) after expanding at a rate as high as 564% y/y in August, finance ministry data showed on October 15.

“The budget balance showed some improvement last month on an annual basis, with strong non-tax revenue generation despite a large expansion in both primary and interest expenditures,” Muhammet Mercan of ING Bank said in a research note, adding “income from interest and fines almost tripled because of unexplained parts of this item ('other miscellaneous revenues')” to TRY8.1bn in the month from TRY2.9bn a year ago.

The Turkish parliament will this week discuss a proposal from President Recep Tayyip Erdogan’s AKP to hike traffic fines. Meanwhile, the Turkish competition board said on October 12 in a written statement that it had launched an investigation into Turk Telekom regarding a claimed violation of competition legislation related to connection times and fees for wholesale leased line services.

The competition authority announced on September 21 it had fined Google some TRY93mn for violating competition laws with mobile software sales. Earlier in September, The Turkish Radio and Television Supreme Council (RTUK) fined broadcaster AS TV, a local channel that broadcasts in the western city of Bursa, to pay a penalty of TRY17,000 for showing the music video for “Secrets” by Pink, featuring “erotic dance figures of a homosexual nature”.

The Turkish Trade Ministry said on October 8 it had asked 114 companies to explain what it determined were excessive price hikes. Erdogan has made it clear that Turkey will fine any “opportunists” who raise prices to an extent that takes unfair advantage of the economic situation with double-digit inflation and a severely devalued lira. Erdogan has also called on Turks to report any stores that they suspect have gone ahead with unusual price hikes.

Ride-sharing firms like Uber and Careem have faced a government crackdown and a barrage of fines during their attempt to take on more than 18,000 local yellow cabs by offering a premium service in higher-quality minivans. Erdogan pledged to take necessary action against Uber in early June, saying the San Francisco-based company’s business in Turkey was “over”.

"One of the main reasons we ended comfort type was to avoid our captains losing their tourism licences," Ibrahim Manna, the managing director of emerging markets at Dubai-based ride-hailing service Careem Networks, told Bloomberg on September 18. "We are dedicated to respecting government decisions, we’ve paid all our fines in advance to avoid additional costs in the future," Manna added.

The impact of inflation should mean a roughly 20% or more increase in major budget items, according to Mercan.

“The pace of the real increase in tax revenues has lost momentum, turning negative at -5.5% in September vs 4.4% on a YtD basis, likely showing the impact of a deterioration in economic activity. Two other points also worth noting are the contraction in special consumption tax income on petroleum & natural gas (reflecting the government’s decision to absorb some of the price shock from the weak currency and oil price spike via an automatic tax adjustment on gasoline prices) and the plunge in VAT on imports (in dollar terms) following an ongoing contraction in import demand,” Mercan also said.

Across January-September, the budget deficit expanded by 79% y/y to TRY57bn while the primary surplus decreased by 75% y/y to TRY3.69bn.

Expenditures rose by 24% y/y to TRY604bn in the first nine months while revenues rose 20% y/y to TRY547bn.

The government's tax revenues rose by 19% y/y to TRY459bn in January-September.

Under Turkey’s new economic programme announced on September 20 by Erdogan’s son-in-law and Finance Minister Berat Albayrak, the target for the 2018 budget deficit/GDP ratio remained unchanged at 1.9% while the budget deficit target rose to TRY72.1bn from TRY65.9bn.

Erdogan announced on September 16 that Turkey was freezing new government investment projects.

For the full year of 2017, the central government budget balance showed a deficit of TRY47.4bn, below expectations at around 1.5% of GDP.