Budget deficit will be lower than expected: Yılmaz

ANKARA

The central government budget is likely to produce a less-than-expected deficit in 2023, Vice President Cevdet Yılmaz has said.

The budget performance will surprise on the upside, said Yılmaz, speaking at the parliament during the discussions on the 2024 budget.

“It looks like the budget deficit will be less than we had anticipated. The deficit is likely to be below 6 percent [of GDP] at around 5.5 percent,” he added.

In the medium-term program unveiled in September, the government forecast that the central budget would post a deficit of 1.63 trillion Turkish Liras, or 6.4 percent of national income.

“Growth and revenue performance is stronger than we had expected. Thus, probably, the budget deficit will be lower than our initial projection,” Yılmaz furthered.

If the impacts of the earthquake on the budget are excluded, the deficit will be less than 3 percent, below the Maastricht criteria, he said.

Yılmaz also said that per capita income will increase from $10,600 last year to $12,500 in 2023.

“We expected per capita income to be $15,000 in 2026. We will then move up to join the league of high-income countries from the high middle-income countries.”

The government expects the economy to expand 4.4 percent in 2023 and the rate of growth to slow to 4 percent next year. Its GDP growth forecasts for 2025 and 2026 are 4.5 percent and 5 percent, respectively.

The annual GDP growth accelerated from 3.9 percent in the second quarter to 5.9 percent in the third quarter of 2023. But the quarter-on-quarter growth slowed from 3.3 percent to 0.9 percent.

Yılmaz also noted that foreign investment inflows into Türkiye has gathered pace in the past six months, while reserves have strengthened, and the exchange rate volatility has diminished.

“The rebalancing in the economy is supporting the Turkish Lira. The increasing interest in lira assets, combined with the stable exchange rates, help to fight inflation.”

Monthly inflation is losing momentum and the decline in annual inflation will become more visible in the second half of 2024, Yılmaz said.

The annual inflation rate ticked up from 61.36 percent in October to 61.98 percent in November, according to the latest official data. However, encouragingly, the pace of monthly increase in consumer prices, which was as high as 9.5 percent in July, eased from 3.43 percent to 3.28 percent.