Turkey’s cash surplus rose by 39% y/y to TRY5.56bn (€1.39bn) in May following a string of deficits recorded in the previous three months, treasury data showed on June 7.

The primary cash surplus, on the contrary, declined by 2% y/y to TRY8.6bn in the month.

In the first five months of this year, the cash budget produced a deficit of TRY21bn versus the surplus of TRY2.49bn seen in the same period of 2016. The primary deficit amounted to TRY21bn across January-May versus the surplus of TRY17bn a year ago.

The finance ministry will release the May central government budget on May 15.

The 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. Consequently, the budget deficit in the first four months amounted to TRY17.9bn against the surplus of TRY5.4bn posted for the same period of 2016.

Since the failed attempt at overthrowing the government last year, Turkish ministers have been pushing stimulation efforts to boost economic growth. Measures including more bank lending at cheaper rates have been pursued, even though strong domestic demand supported by loans carries with it the risk of higher inflation as well as higher current account and budget deficits. 

Recently announced government measures aimed at stimulating economic growth are expected to reduce the government’s tax revenues this year.  If the government opts to boost growth by directing more state spending into infrastructure projects, Turkey could experience higher budget deficits. 

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.

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.