Turkey posts second-largest budget deficit on record as spending surges
Turkey reported its second-largest budget deficit on record in April as government spending surged in response to the COVID-19 outbreak.
The deficit totalled 43.2 billion liras ($6.3 billion) for the month, falling just short of a record 43.7 billion liras deficit in March, official data published on Friday showed. The gap more than doubled from 18.3 billion liras in April 2019.
Spending, excluding interest payments on debt, jumped an annual 29 percent to 91.4 billion liras, as spending on health, retirees and social projects almost doubled from a year earlier to 32.6 billion liras.
Revenue grew 13 percent to 65.2 billion liras, with so-called “other income” surging 81 percent to 16.1 billion liras. Tax collection rose 0.6 percent to 49.1 billion liras, as higher sales tax revenue offset a decline in income and corporation 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 has grown 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 liras, largely composed of delayed income tax payments.
The combined deficit for March and April of 86.9 billion liras 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 72.8 billion liras. The government’s 2020 target is for a gap of 138.9 billion liras, 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.