Turkey Says Budget Rise Won’t Harm Discipline Before Poll

Turkey will keep the increase in government spending to 7.3 percent to protect budget discipline in the run up to local elections in March, Finance Minister Mehmet Simsek said today in Ankara.

The ministry expects public expenditures to increase to 436.3 billion lira ($220.4 billion) in 2014, Simsek said. Revenues are forecast to increase by 4 percent to 403.2 billion lira, leaving Turkey with a public budget deficit of 33.2 billion lira, the minister said.

The expected increase in government spending is below the average expenditure growth seen in the past and is a sign the government won’t be boosting outlays ahead of the local elections scheduled for next year, Simsek said. The government earlier this month lowered its budget deficit forecasts for this year and next from 2.2 percent and 2 percent of gross domestic product to 1.2 percent and 1.9 percent of the GDP, respectively.

“You’ll see for the first time in this budget for 2014 that we are taking fiscal expenditures under control in a very strong way,” Simsek said. “In fact, in real terms, we are seriously reducing them. This is a very strong message.”

Turkey’s budget gap in September narrowed to 4.7 billion lira from 5.8 billion lira a year earlier, Simsek said. Expenditure has been in line with government plans in the first nine months of the year, reaching 72 percent of the total amount allocated, he said.

Yield on two-year benchmark notes fell 3 basis points, or 0.03 percentage point, to 8.05 at 1:07 p.m.

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