Budget gap narrows on 3G license payment

Bloomberg

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Turkey’s budget deficit narrowed to 947 million Turkish Liras ($610 million) in April after the government received payment for new high-speed wireless licenses, the Finance Ministry said.

The overall budget deficit narrowed from 1.1 billion liras in April 2008, the ministry said in a statement on its Web site yesterday. The budget surplus before interest payments on debt, the so-called primary surplus, narrowed to 2.1 billion from 3.1 billion liras a year earlier.

The government says a wider budget deficit for the whole of this year is inevitable as the economy moves into recession, reducing tax revenue and forcing more spending on measures to preserve jobs. The country is negotiating a new lending accord with the International Monetary Fund, or IMF, to support the lira and reduce the Treasury’s need to borrow from financial markets. In the first four months of 2009, the overall budget deficit rose to 20.1 billion liras, double the original goal for the whole of the year and about 42 percent of a revised target of 48 billion liras the government announced on April 13.

In April, the government received 1.8 billion liras from mobile phone companies in payment for three high-speed wireless licenses, the ministry said. That helped non-tax revenue jump 57 percent from a year earlier to 6.6 billion liras. Tax revenue in April fell 0.7 percent from the same month last year to 12.8 billion liras.

Spending in the month rose 13 percent from April 2008 to 21 billion liras, the ministry said. Transfers to the country’s health and pensions system rose 20 percent to 7.8 billion liras, an increase the ministry said was to compensate for lower social security contributions from workers as the economy contracts.

Growth to slow down
The government expects gross domestic product to shrink 3.6 percent this year. The Privatization Administration, or ÖİB, on May 7 canceled an auction of rights to run the National Lottery after the bidding groups refused to meet the starting price. The ÖİB will press ahead with plans to sell the company and expects a successful sale later in the year as economic conditions improve, Metin Kilci, the head of the Administration, said on May 8.

Figures showed the current-account deficit also narrowed in March from a year earlier as falling energy prices and slumping demand helped reduce the import bill.

The deficit contracted to $992 million from $4.3 billion in March 2007, the Central Bank said last week.

It was the seventh consecutive month that the deficit has either narrowed or shifted into surplus, as the global crisis drives the economy into recession, curbing demand for imported goods. Falling global energy prices are also helping narrow the gap, which the government expects to fall to $11 billion in 2009 from $41.7 billion in 2008.