Turkey’s budget discipline ‘firm despite seasonal slide’

The figures were weaker than figures from a year earlier, with the budget deficit up by 1.8 billion liras ($700 million) in March and up by 3.9 billion liras ($1.5 billion) in the first quarter year-on-year.

Şimşek claimed that the increase in the budget deficit should not be a source of concern, as it is mostly related to “seasonal costs.”

“There is a strong increase in tax income, which rose by around 13 percent … When we consider that a majority of tax income normally comes from consumption, this increase might imply that economic activities are not slowing down,” he said. 

Şimşek stressed that the budget figures were in line with projections, as first quarter numbers roughly corresponded to a quarter of yearly targets, with no deviations from the budget discipline.

“There is an increase of over 4 billion liras ($1.5 billion) in interest expenditures, which have a periodic nature, compared to last year,” he said. 

“But if you take [the periodicity in interest expenditures] into account, you can see budget discipline continues because interest rate expenditures will not increase all year round. There is a periodicity related to the maturity structure,” he added.

Şimşek stated that the non-interest surplus, which was 12.5 billion liras ($4.7 billion) in the first quarter of 2014, was 12.7 billion liras ($4.8 billion) in the first quarter of 2015. He said this “clearly indicates that there is not even a slight hesitation in budget discipline and there is a strong will to reach targets.”

He also said he expects growth to accelerate after the June parliamentary elections and four percent growth this year is still achievable.

Core inflation has fallen to 7.1 percent, with the downward trend continuing, Şimşek said, also forecasting that Turkey’s current account deficit would narrow to between 3.5 and 4 percent of national output this year.