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Turkey’s October data shows budget on track, says finance minister

Turkey’s budget shows a $1.6bn deficit last month, down from a$2.15bn in October last year

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Turkey’s finance minister vowed on Friday to maintain strong fiscal discipline in the period ahead and said budget data for October showed the government was likely to meet its deficit target this year.

The budget showed a deficit of 3.17 billion lira ($1.6 billion) last month, down from a $2.15bn in October last year, showed the finance ministry figures.

The primary balance, which excludes interest payments, showed a deficit of $372 million in October, compared with a deficit of $333m lira in October last year.

“We will continue strong budget discipline in the coming period,” Finance Minister Mehmet Simsek said in a statement.

“The strong fiscal stance we have adopted is the most important factor that keeps us resistant against external shocks at a time when the risk perception in the global markets is on the rise,” he said.

Investors are keeping a close eye on government spending in the run-up to an election cycle starting next year. Heavy and conspicuous spending ahead of polls, including on high-profile infrastructure projects, was a common phenomenon in the 1990s.

Simsek said last month that his government did not seek an “election economy” and had no intention of using the upcoming polls as a way of courting popularity through spending.

Turkey revised down its year-end budget deficit in October to around $9.6bn, or 1.2 percent of GDP, well below a previous forecast of 2.2 percent.

Turkey’s public debt remains one of the lowest among peers as a percentage of GDP but its balance of payments problems prompted the International Monetary Fund to call last month for it to tighten monetary and fiscal policy.

The data showed a budget deficit of 7.7 billion lira in the first ten months of this year, when the primary surplus amounted to $18.9bn.