Turkey’s central government budget produced a deficit of TRY6.43bn (€1.5bn) in September, representing a 62% y/y decline on the TRY16.9bn deficit posted a year earlier, the Finance Ministry announced on October 16.
The budget produced a primary surplus of TRY1.97bn in the month versus a primary deficit of TRY10.7bn in September 2016.
Data from the finance ministry showed that expenditures rose by 3% y/y to reach TRY54.4bn with interest payments rising 35% y/y to TRY8.4bn and non-interest expenditures declining 2% y/y to TRY46bn. Revenues exhibited a 35% y/y increase to stand at TRY48bn in the month. Tax revenues also rose by 35% y/y, reaching TRY41.8bn.
The cumulative budget deficit rose by 163% y/y to TRY31.6bn across January-September. Revenues increased by 13% y/y but the increase in expenditures was higher at 17% y/y. The primary surplus declined by 50% y/y to TRY15bn in the first nine months of the year.
On October 13, the Turkish parliament’s budget planning commission agreed on a set of amendments in the previously announced tax hike plans. Accordingly, the 2% corporate tax rate hike will be extended to include all corporations instead of only financial institutions as previously announced. The commission also agreed to trim motor vehicle tax hike to 15%-25%, depending on the engine size, from a previously announced 40%.
Turkey’s budget deficit widened 25% to TRY29.3bn last year. The government’s central budget shortfall estimate for 2017 is 2% of GDP, or TRY61.7bn, according to the latest Medium Term Programme unveiled on September 27.