Turkey Posted a Budget Surplus of 3.1 Billion Liras in June

Turkey posted a budget surplus of 3.1 billion liras ($1.9 billion) in June compared with a 5.4 billion-lira deficit the year earlier, Finance Minister Mehmet Simsek said.

In the first six months of the year, the budget produced a surplus of 2.9 billion liras, compared with the target for the full year of a 33.5 billion-lira deficit, Simsek told reporters in the capital, Ankara, today. It was the biggest six-month surplus in 40 years, he said.

The economy expanded 11 percent in the first quarter from the year-earlier period, the fastest pace among the Group of 20 major economies, swelling tax revenue. A government offer to waive penalties on overdue taxes is also adding to revenue, Simsek said today.

The surplus excluding interest payments on debt was 4.7 billion liras last month, compared with a shortfall of 2.1 billion liras in the same month last year, he said. In the first six months, the ex-interest surplus was 25.3 billion liras, almost double the year-end goal of 14 billion liras.

The government aims to save the bulk of the additional revenue, Simsek said today, telling ministries that any requests for additional cash will be rejected unless they are for investments that develop high-tech industry or improves infrastructure.

‘Magnificent’

The expansion in the $735 billion economy helped Prime Minister Recep Tayyip Erdogan win a third term in elections on June 12. The economic performance, which followed 8.9 percent growth in the whole of 2010, is “magnificent,” Erdogan said in a speech to his party’s lawmakers on June 30.

Non-interest spending in the first half of the year was 121 billion liras, 10.9 percent more than the same period last year. The government’s budget plans see 8 percent expenditure growth this year.

Turkish authorities are battling a current-account deficit that has widened to the biggest since records began in 1984 as the expanding economy draws in oil, raw materials and consumer goods. Central bank limits on bank lending will help to narrow the gap by the end of the year, and the government is working on longer-term steps to encourage local production, Simsek said.

“We will need a more interventionist industrial policy over the next four years,” he said.

To contact the reporters on this story: Ali Berat Meric in Ankara at americ@bloomberg.net; Steve Bryant in Ankara at sbryant5@bloomberg.net.

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.