Turkey’s budget deficit recorded at €4.6bn for Jan-April

Turkey’s budget deficit recorded at €4.6bn for Jan-April
By bne IntelliNews May 15, 2017

Turkey’s central government budget produced a deficit of TRY2.96bn in April versus the surplus of TRY5.36bn seen a year ago, data from the finance ministry showed on May 15. Consequently, the deficit in the first four months amounted to TRY17.9bn (€4.62bn) against the surplus of TRY5.4bn posted for the same period of 2016.

The Turkish government’s budget was stretched by a set of economic stimulus measures brought in during the build-up to the April 16 referendum that officially narrowly voted to bring in an executive presidency. Fiscal policy easing was temporary and a rapid improvement in the budget balances is to be expected in the second half, Deputy PM Mehmet Simsek said last month.

The primary surplus also declined by 97% y/y to TRY267mn in April while it posted a cumulative decline of 83% y/y to TRY4.2bn in the first four months of 2017.

VAT revenues rose by 22% y/y last month despite tax cuts delivered on the way to the referendum, while VAT on imports increased by 18% y/y and special consumption tax revenues rose by 19% in April thanks to boosted government spending.

Recently announced government measures aimed at stimulating economic growth are expected to reduce the government’s tax revenues this year. The government transferred its stakes in a number of listed and unlisted companies in March to the country’s newly formed sovereign wealth fund. The switching of the assets will result in a TRY1bn loss in budget revenue.

Tax cuts on white goods and furniture are set to cost the state budget some TRY800mn, Finance Minister Naci Agbal said on April 10.

Also last month, the government on April 18 submitted a bill to parliament to restructure a total of TRY73bn worth of unpaid tax debts. The government introduced a tax amnesty following last year's failed July 15 coup. However, revenues derived from the amnesty came in below expectations.

Turkey’s budget deficit widened 25% to TRY29.3bn last year.  The government’s central budget shortfall target for 2017 is 1.9% of GDP, or TRY46.9bn.

Turkish Central Government Budget Figures
(TRY bn) Jan-Apr y/y Realisation-2015 Realisation-2016 15/16 Budget-2017 16/17-Budget
Revenues 197.8 9.0% 482.8 554.4 14.8% 598.3 7.9%
Tax Revenues 158.7 12.6% 407.8 458.7 12.5% 511.1 11.4%
VAT Revenues 17.9 7.0% 46.4 54.0 16.3% 57.1 5.7%
SCT Revenues 38.6 13.1% 105.9 120.4 13.7% 136.4 13.3%
Import Tax Revenues 29.0 18.9% 74.6 76.6 2.6% 83.7 9.3%
Expenditures 215.7 22.5% 506.3 583.7 15.3% 645.1 10.5%
Interest Expenses 22.1 15.1% 53 50.2 -5.2% 57.5 14.4%
Budget Balance -17.9 - -23.5 -29.3 24.5% -46.9 60.1%
Primary Balance 4.2 -83.0% 29.5 21.0 -28.9% 10.6 -49.3%
Source: ministry of finance