Turkey posts second-largest budget deficit on record as spending surges

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Photo by M. B. M. (Unsplash)

Turkey reported its second-largest budget deficit on record in April as government spending surged in response to the COVID-19 outbreak, the Ahval news website reported on Friday.

The deficit totaled TL 43.2 billion ($6.3 billion) for the month, falling just short of a record TL 43.7 billion deficit in March, official data published on Friday showed. The gap more than doubled from TL 18.3 billion in April 2019.

Spending, excluding interest payments on debt, jumped an annual 29 percent to TL 91.4 billion, as spending on health, pensions and social projects almost doubled from a year earlier to TL 32.6 billion.

Revenue grew 13 percent to TL 65.2 billion, with so-called “other income” surging 81 percent to TL 16.1 billion. Tax collection rose 0.6 percent to TL 49.1 billion, as higher sales tax revenue offset a decline in income and corporate tax.

Turkey has increased state spending since a currency crisis struck the economy in the summer of 2018 and led to a painful recession. Expenditure grew further after the government reported the country’s first case of the coronavirus on March 11 – it has pledged an aid package of 240 billion lira, largely composed of delayed income tax payments.

The combined deficit for March and April of TL 86.9 billion was equal to 70 percent of the budget gap reported for the whole of 2019.

The deficit for the first four months of the year was TL 72.8 billion. The government’s 2020 target is for a gap of TL 138.9 billion, or 2.9 percent of projected GDP.

The deficit to GDP calculation is based on an economic growth estimate of 5 percent for 2020, a goal that is now unachievable due to the pandemic.

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