The central government budget ran a deficit of TRY2.4bn (€869mn) in February versus a TRY1.7bn surplus a year ago as expenditures rise more than revenues in the month.

The central budget also posted a primary surplus of TRY4.53bn in February, representing a 9.3% y/y decline, the ministry of finance said on March 16.

Expenditures increased by 29.8% y/y while revenues showed a 16.6% y/y rise in February, according to data of the ministry. On the expenditure side, interest expenditures jumped 107.1% y/y which the ministry says is temporary and due to the maturity structure of the debt stock. Non-interest expenditures rose by 21% y/y. Commenting on the February budget realisations, finance minister Mehmet Simsek said that the budget deficit seen in February was due to higher seasonal spending on infrastructure and interest. Capital expenditures and capital transfers were up 166% y/y and 205% y/y, respectively, data showed.

On the revenues side, tax collection rose 17.2% y/y with VAT revenues rising only 0.5% y/y, and VAT collection on imports falling 5% y/y, signalling weak domestic demand and economic activity. However, Simsek expects a strong budget performance in the coming months due to a recovery in domestic demand.

The government targets TRY20.96bn of deficit (of 1.1% of GDP) and TRY33bn primary surplus this year.

In the first two months of the year, the budget surplus fell 60.6% y/y to TRY1.41bn while the primary surplus rose 11.7% y/y to TRY13.3bn. Expenditures increased by 14.7% y/y and revenues rose by 11% y/y in January-February.