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
|Fiscal Balance (% of GDP)||-1.0||-1.1||-1.0||-1.1||-1.5|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||15.52||-0.09 %||Jan 16|
|Exchange Rate||5.34||-0.85 %||Jan 16|
|Stock Market||95,411||1.41 %||Jan 16|
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January 16, 2019
At its monetary policy meeting on 16 January, the Central Bank of the Republic of Turkey (CBRT) left the one-week repo rate unchanged at 24.00% for the third consecutive meeting. The Bank’s decision to keep rates at their current high level was motivated by a desire to ensure inflation remains on the downward trend observed since November.
January 14, 2019
Industrial production declined 6.5% in November in calendar-adjusted year-on-year terms, a deterioration from October’s 5.7% decrease.
January 11, 2019
The current account balance recorded a USD 1.0 billion surplus in November, down from October’s revised USD 2.7 billion surplus (previously reported: USD 2.8 billion) but a marked turnaround from the USD 4.5 billion deficit observed in the same month last year.
January 3, 2019
Consumer prices fell 0.40% from the previous month in December, up from November’s 1.44% decrease, according to data released by the Turkish Statistical Institute (Turkstat).
January 2, 2019
The Purchasing Managers’ Index (PMI), produced by the Istanbul Chamber of Industry (ICI) and IHS Markit, decreased from 44.7 in November to 44.2 in December.