Turkey’s Budget Falls Deeper in the Red as Pandemic Hits Revenue

(Bloomberg) --

Turkey posted a budget deficit for a sixth month, as the government ramped up spending to support an economy paralyzed by the coronavirus pandemic and allowed for tax deferrals that chipped away at revenue.

The central government ran a monthly fiscal gap of 29.7 billion liras ($4 billion) in July, bringing the deficit in the first seven months of the year to 139.1 billion liras. That compares with a surplus of 9.9 billion liras in July 2019 and a 123.7 billion-lira deficit for all of last year.

Key Insights

• Spending excluding interest payments rose an annual 42.2% to 107.8 billion liras in July as the government unveiled a 240 billion-lira stimulus package to help businesses ride out the economic storm caused by the pandemic.
• Tax revenue rose 30.3% even as the government postponed the collection of corporate and income tax. Income reached 76 billion liras in July compared with 58.3 billion liras a year earlier.
• Revenues fell 7.4% from a year earlier, indicating a significant decrease in real terms when adjusted for consumer inflation of 11.8%.

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• Turkey will miss its target for the budget deficit in 2020 as revenues “zeroed out,” Treasury and Finance Minister Berat Albayrak said in an interview last week. The ratio of the shortfall to gross domestic product may reach 5%-6% in 2020, the minister said.
• Turkey’s Treasury posted a cash budget deficit of 30.8 billion liras in July and a primary gap of 23.2 billion liras. The headline cash budget deficit reached 140.1 billion liras in the first seven months of the year.

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