Turkey posts biggest budget deficit of 2019 in December

Turkey's budget deficit widened by 68 percent to 30.8 billion liras ($5.2 billion) in December, the biggest monthly gap of 2019.

The shortfall represented about a quarter of the annual deficit of 123.7 billion liras, which grew by 70 percent from 2018. The government had originally targeted a deficit of 80.6 billion liras for 2019, but revised it in October after spending surged.

Spending in December rose 22 percent from the same month of 2018 to 104.1 billion liras, increasing at more than double the pace of revenue, which climbed 9.1 percent to 73.3 billion liras, Treasury and Finance Ministry figures showed on Wednesday.

Turkey’s government embarked on a spending spree last year, helped by tens of billion of liras in funds from the central bank, after the economy slumped into a recession following a currency crisis in the summer of 2018. Tax revenue failed to keep pace with inflation, which averaged 15.2 percent last year, as some companies registered losses and consumer spending declined.

A budget surplus of 7.8 billion liras in November had raised hopes that the government might be succeeding in curbing spending.

Expenditure for the year was 999.5 billion liras, rising 20 percent from 2018 as interest expenses doubled to 99.9 billion liras. Revenue grew by 16 percent to 875.8 billion liras, pared back by an 8.3 percent increase in tax receipts.   

The budget deficit for 2019, totalling $21 billion in dollar terms, was equivalent to 2.9 percent of the GDP Turkey reported for the 12 months to September. That equalled the government’s revised year-end goal. It had originally targeted a deficit of 1.8 percent of economic output.

Turkey is also targeting a budget deficit of 2.9 percent of GDP for 2020, when it expects the economy to grow by 5 percent. Some economists see those goals as ambitious without additional revenue-raising measures, particularly as less central bank money will be available to draw on.