Turkey runs $3.88B budget deficit over first 10 months

ANKARA (AA) – Turkey’s government

has run a 12 billion Turkish liras ($3.88 billion) budget deficit over the first 10 months of 2016, Finance Minister Naci Agbal said Monday.

Speaking at a press conference in Ankara, Agbal said the budget deficit in September was 16.9 billion Turkish liras ($5.46 billion).

"The deficit was 1.4 billion liras ($451 million) less than the same period in 2015. We maintained the budget discipline in the first nine months of the year and will continue to maintain it in the coming months," he said.

Turkish government revenues in September stood at 36.1 billion Turkish liras ($11.63 billion), a 6.6 percent rise year-on-year, while budget expenditures were 53 billion Turkish liras ($17.1 billion), up 10.5 percent from a year earlier.

According to the ministry, Turkish government’s budget revenues reached 404.5 billion Turkish liras ($130.4 billion) in the first nine months of the year, a 14.2 percent rise over the same period last year.

Tax revenues also rose nearly 10.3 percent within the period to 329 billion liras ($106 billion). Budget expenditures for the January-September period rose to 416.5 billion Turkish liras ($134.2 billion), marking a 13.3 percent increase year-on-year.

The government's expenditures for health, pensions and welfare rose nearly 19.8 percent in the first eight months of the year to 18 billion liras ($5.80 billion) compared with the same period last year.

Personnel expenditures rose 19.6 percent, reaching 113 billion liras ($36.41 billion) in January-September 2016.

Interest expenditures stood at 41.7 billion liras ($13.4 billion) in that period, a fall of 6.9 percent.

The government is aiming for a budget deficit of 29.7 billion Turkish liras (nearly $10 billion) at the end of the year, according to the Finance Ministry.

- $15.2B budget deficit in 2017

In 2017, Turkish Finance Ministry estimates budget expenses for the fiscal year would reach 645.1 billion liras ($208.8 billion), while budget income would reach 598.3 billion liras ($193.6 billion), resulting in a budget deficit of 46.9 billion liras ($15.2 billion).

We gave a forecast that the central government’s budget gap would reach 1.7 percent of the Gross Domestic Product (GDP) this year and we aim to reduce it to 1 percent in 2018, he said.

According to the finance minister, the fiscal policy applied in the period between 2017 and 2019 would help the country’s growth further.

"More resources have been allocated in order to set the qualified work force, innovation and investments to boost production and export," he said.

"We plan to reduce the EU-defined debt stock, which is estimated to be at 32.8 percent by the end of 2016, to 31.9 percent by the end of 2017, and to 29.9 percent by the end of 2019," the minister said.

Agbal highlighted that the biggest portion of public investment had been allocated to the transportation sector in 2017 with 22.1 billion liras ($7.1 billion), followed by education and agriculture sectors with 13.7 billion liras ($4.43 billion) and 10.3 billion liras ($3.3 billion), respectively.

The minister also pointed out that real sector subsidies would be boosted by 16 percent to reach 32.4 billion liras ($10.5 billion) in 2017.

- Deficit is GDP’s 4.3 percent

About the Turkish economy's current performance, Agbal said favorable conditions for foreign financing would continue, and the country's current account deficit to the GDP ratio would decline to 4.3 percent by the end of this year, from 4.5 percent last year.

"It [current account deficit] is expected to go down to 3.5 percent in the middle run. The inflation rate will decrease to 5 percent in the same period as well," he said.

The minister also underlined the increase in women participation in the labor force and new employment opportunities as important factors to advance the country's growth potential.

"We have created 7 million new jobs since the 2008 global financial crisis, and became the second best performer among the OECD [Organisation for Economic Co-operation and Development] countries," he said.

"Turkey's economy grew 3.9 percent in the first half of 2016, which is equivalent to 2.5 times of the developing economies' growth, excluding India and China," he added.