Turkey Budget Takes a Hit as Spending Surges on Virus Measures

(Bloomberg) -- Turkey posted one of its widest budget deficits on record, as measures to contain the coronavirus outbreak paralyzed economic activity while spending jumped and tax deferrals chipped away at government revenue.

The central government ran a monthly fiscal gap of 43.2 billion liras ($6.3 billion) in April, just shy of a record deficit of 43.7 billion liras in March. That compares with a gap of 18.3 billion liras a year earlier and an annual deficit of 123.7 billion liras in 2019.

Turkey began gradually restricting people’s mobility in March and unveiled a 240 billion-lira ($34.7 billion) stimulus package largely consisting of tax deferrals to help businesses ride out the economic storm caused by the pandemic.

Meanwhile, spending excluding interest payments rose an annual 28.9% to 91.4 billion liras in April. To help plug the widening gap in government finances, the Treasury has ramped up borrowing. It raised 60 billion liras last month, twice as much as it had targeted.

Key Insights

• Tax income little changed as the government postponed the collection of corporate and income tax. Income reached 49.1 billion liras in April compared with 48.8 billion liras a year earlier
• Revenue rose 13.1% from a year earlier, indicating an increase in real terms when adjusted for consumer inflation of 10.9%

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• Turkey’s Treasury posted a cash budget deficit of 46.2 billion liras in April and a primary gap of about 30.5 billion liras
• Virus Turns Back Clock in Turkey With Current Account in Deficit

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