Fiscal Balance in Turkey

Turkey - Fiscal Balance
Government presents more restrictive 2019 budget
In late October, Treasury and Finance Minister Berat Albayrak presented the draft 2019 budget to the parliament’s Planning and Budget Commission, ahead of a likely submission to parliament in December. The budget sets out in more detail the tighter fiscal stance previously signaled in September’s New Economic Plan and, if implemented, should help rebalance the economy and avoid further overheating. However, budgeted spending could well be exceeded, which could in turn weaken investor confidence in the government’s commitment to fiscal prudence and put downward pressure on the lira.
Expenditure is seen at TRY 961 billion, which is up roughly 17% from the estimate for 2018. However, given still-elevated inflation next year, expenditure in real terms is thus set to be fairly flat. Looking at the key categories, spending on wages and transfer payments are set for notable above-inflation increases, with the latter likely due in part to an expected rise in unemployment. The government has instead opted to make savings in the capital budget, which is projected to shrink sharply.
Revenues are seen at TRY 880 billion, also up around 17% year-on-year. Consequently, the government foresees a fiscal deficit of 1.8% of GDP in 2019, unchanged from the projection made in the New Economic Plan. If implemented, the draft budget should help support the lira, which lost significant value earlier this year—partly due to investors’ concerns over excessive fiscal stimulus. However, spending overruns are a significant possibility, particularly given local elections early next year and the fact that 2018 expenditure is expected to markedly overshoot the initial budgeted estimate.
Turkey - Fiscal Balance Data
2015 | 2016 | 2017 | 2018 | 2019 | |
---|---|---|---|---|---|
Fiscal Balance (% of GDP) | -1.0 | -1.1 | -1.5 | -2.0 | -2.9 |
Turkey Facts
Value | Change | Date | |
---|---|---|---|
Bond Yield | 12.00 | -0.09 % | Dec 31 |
Exchange Rate | 5.95 | -0.85 % | Jan 01 |
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Economic News
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Turkey: Inflation increases to over one-year high in March
April 6, 2021
Consumer prices increased 1.08% from the previous month in March, picking up from February's 0.91% increase.
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Turkey: Manufacturing PMI rises in March
April 1, 2021
The Istanbul Chamber of Industry Turkey Purchasing Managers’ Index (PMI) rose to 52.6 in March from 51.7 in February.
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Turkey: Business confidence reaches near three-year high in March
March 26, 2021
Business confidence in Turkey rose to a near three-year high 110.8 in March from 109.3 in February.
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Turkey: Consumer confidence ticks up to multi-year high in March
March 24, 2021
Consumer confidence rose to a multi-year high of 86.7 in March from 84.5 in February; however, the index remained markedly below the neutral 100-threshold that separates pessimism from optimism among consumers. The uptick was driven by a broad-based improvement with views on the current financial situation and the expected financial situation in the year ahead turning less downbeat, while attitudes towards the general economic situation over the next 12 months and likelihood of spending also improved.
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Turkey: Central Bank aggressively tightens stance in March
March 18, 2021
At its 18 March meeting, the Monetary Policy Committee of the Central Bank of Turkey raised the one-week repo rate by 200 basis points from 17.00% to 19.00%.