Turkey is extremely likely to miss its budget shortage target of 1.5 percent of national output this year as growth slows down and revenues fall but is looking at disciplinal measures including spending controls, Finance Minister Mehmet Şimşek told Reuters.
Economic development in the second quarter would believably be firmer than in the first but preliminary data advised it would be softer in the third, Şimşek told in an interview in his office late on Wednesday.
“It looks very improbable that we’ll accomplish our fiscal targets,” Şimşek told.
Stellar economic development over the last decade has been the bedrock of the success of Turkey’s ruling Justice and Development Party (AK Party), which has overseen a near tripling of per capita income since coming to power in late 2002.
But with growth slowing, budgetary balances are degenerating as the government spends more to shore up the economic system while taking in less in tax revenues and disappointing privatisation receipts.
Turkey is due to bring out second quarter figures for GDP on Monday. Development in the first quarter was 3.2 percent year-on-year and Şimşek told the country was likely to miss its four percent growth target for 2012 as a whole.
“We’re working on the corrective measures, but I can not comment on the timing. We’re looking across the board, from spending controls to other measures,” Simsek told, declining to give any details because government negotiations on the 2013 budget had only just begun.
The government has to submit the 2013 budget to parliament by October 17.
Şimşek told that development this year had been driven by exportations rather than domestic demand, having a negative impact on revenues because Turkey gives tax rebates to exporters as part of a policy to advance production.
“It is not (just) that the headline gross domestic product growth is softer, it’s also that the composition of development is very unfavorable when it comes to tax revenues,” he told.
He said Turkey would comfortably meet a gross debt to GDP target of 37 percent by the end of the year and that he saw a higher chance of being within a current account deficit target of $65 billion, equivalent to 8 percent of GDP, than of overshooting it. ($1 = 1.8215 Turkish liras)
