May 15 2019

Turkish budget deficit surges in April, threatening year-end goal

Turkey posted a budget deficit of 18.3 billion liras ($3 billion) in April, bringing the total deficit this year to 68 percent of its year-end target.

The deficit surged more than five-fold from 2.75 billion liras in the same month of 2018, Treasury and Finance Ministry data showed on Wednesday.

Turkey’s target of a budget deficit of 80.6 billion liras for the whole of the year now looks out of reach. The gap has widened during a deep economic recession as the government cut taxes and spent billions of liras ahead of March 31 local elections. The cost of repaying debt has also jumped after inflation accelerated to almost 20 percent annually.

Expenditure climbed 12.8 percent in April from a year earlier to 76 billion liras, while revenue shrank 10.7 percent to 57.7 billion liras, after one-off income-raising measures expired. Tax revenue rose 8.3 percent to 48.8 billion liras.

The lira fell 0.4 percent to 6.05 per dollar at 3:38 p.m. in Istanbul, little changed from levels earlier in the day.

Economists have expressed concern that a rerun of March 31 local elections for the mayor of Istanbul, announced last week, may prompt the government to spend more cash, leading to a further deterioration in Turkey's finances.

The ministry's release of the April budget data was delayed by more than two hours on Wednesday. It gave no reason for the delay.