Turkey’s March budget gap widens

Bloomberg

The shortfall widened from 4.9 billion liras in March 2008, the Finance Ministry in Ankara said in an e-mailed statement Tuesday. The deficit before interest payments, the so-called primary balance, widened to 4.3 billion from 117 million liras a year earlier.

The government on Monday announced that it would review its budget plans as part of efforts to win new loans from the International Monetary Fund, or IMF.

The global economic crisis has undermined Turkey’s spending plans, which were drawn up on the assumption that 4-percent growth would increase tax income. The economy will shrink 3.6 percent this year, Deputy Prime Minister Nazım Ekren said Monday.

The budget deficit in the first three months of the year was 19.1 billion Turkish Liras, the ministry said yesterday. That’s almost double the original deficit goal for the whole of the year and about 40 percent of the revised target of 48 billion liras Finance Minister Kemal Unakıtan announced Monday.

The three-month deficit figure is "in harmony with the revised program," the ministry said Tuesday.

Non-interest spending

Non-interest spending rose 25 percent in March from a year earlier ahead of local elections at the end of the month. The ruling Justice and Development Party, or AKP, won the vote with a reduced majority compared with their 2007 general election win. The ministry attributed the higher spending to "programs introduced in order to preserve the economic activity of 2008."

Tax income in the month fell 3.7 percent from a year earlier, the ministry said.