Turkey sees no budget goal overshoot in 2013

ANKARA - Reuters

Turkish Finance Minister Mehmet Şimşek says the budget deficit this year is expected to come in below its target of 2.2 percent of GDP. AA photo

Turkish government spending won’t overshoot budget targets this year, forecasting that the budget deficit this year would come in below its target of 2.2 percent of gross domestic product (GDP), Finance Minister Mehmet Şimşek has said.

The primary surplus will meanwhile exceed its target of 1.2 percent of national output this year, Şimşek told Reuters in an interview.

Şimşek said downward risks against the 4 percent growth rate target still remained. Recovery in the European Union will positively affect growth, but the rate will stay below 4 percent, he added. Deputy Prime Minister Ali Babacan also expressed concern. “There are downward risks to our 4 percent growth target; while regarding growth figures alone [the situation] is good, but there are some concerns about growth quality,” he said during the fourth Istanbul Finance Summit on Sept. 18 .

The government is set to reveal its medium term program, in which annual targets will be revised, next month.

Şimşek said Turkey generally has a growth based on domestic demand, net exports’
contribution to the growth was exceptional.

“This is not a structure that we prefer. We have been making medium-long term reform works to improve it. But structural transformation takes time. Turkey will probably continue to grow based on domestic demand next year,” he said.

‘Temporary relief’

Turkey will get only brief relief from the surprise postponement of a reduction in U.S. economic stimulus and must press ahead with plans to rebalance its own economy.

Turkey’s gaping current account deficit, mostly driven by huge energy imports, and high foreign debt have made it one of the most exposed to the shift in global capital brought by any winding down of U.S. Federal Reserve bond-buying.

Its lira currency gained 3 percent in response to the Fed’s surprise decision on Sept. 18 to put off the start of such moves.

“The Fed’s tapering decision will provide temporary relief, but its current policy will not continue forever,” Şimşek said. “Price volatility, interest rates, exchange rates or other variables, I don’t see them as a fundamental crisis. I see this as repricing of assets,” he said.

Meanwhile, the finance minister said the government had taken important steps in privatizations this year, adding that they would be collecting $2.7 billion from privatizations over the rest of this year.

Privatizations are expected to add around 8.3 billion Turkish Liras to the budget this year.