The central government budget, that produced a deficit of TRY 1.45bn in February 2012, posted a surplus of TRY 1.7bn (EUR 550mn) in Feb 2013, data of the ministry of finance showed on Monday. The primary surplus rose by 41% y/y to TRY 4.99bn in February.

Budget revenues were up 5.9% y/y but expenditures fell 3.5% y/y, the ministry said. Looking at the breakdown of the revenues; tax revenues rose 7% y/y with VAT increasing 24.9% y/y and special consumption tax collection rising 15.5% y/y. Import tax revenues fell 0.8% which may be seen as a sign of slowing imports. This is good news for the current account deficit which is expected to improve this year as the economic activities and the country’s imports slow.

On the expenditure side; the ministry data show that interest expenditures declined 33.4% y/y and non-interest expenditures rose by a limited 1.7% y/y. Government’s capital expenditures and current transfers, that soared 544% y/y and 3,698% y/y, respectively, in January; contracted 65.1% y/y and 4.5% y/y in February.

In the first two months of the year, the budget surplus fell 20.4% y/y to TRY 3.58bn and primary surplus declined 19% y/y to TRY 11.92bn. Revenues were up 4.3% y/y and expenditures rose 6% y/y in January-February.

Commenting on the budget realisations, finance minister Mehmet Simsek said that the budget performance was very strong in the first two months of the year. This strong performance indicates that the year-end budget targets will be achieved, according to the minister.

This year, the government targets a budget deficit of TRY 33.3bn (1.9% of GDP) and a primary surplus of TRY 18.7bn (1.1% of GDP). Note that, these forecasts were made under the assumption that the Turkish economy will grow 4% this year.