Turkish Budget Caps 2020 Deeper in the Red

Shoppers walk through the Carsamba market in the Fatih district of Istanbul, Turkey, on Wednesday, Nov. 4, 2020. The prospect of a Joe Biden victory in the U.S. election is additionally rattling lira traders already concerned over Turkey's widening current-account deficit, dwindling foreign reserves, geopolitical tensions and rising Covid-19 infections. Photographer: Nicole Tung/Bloomberg
Shoppers walk through the Carsamba market in the Fatih district of Istanbul, Turkey, on Wednesday, Nov. 4, 2020. The prospect of a Joe Biden victory in the U.S. election is additionally rattling lira traders already concerned over Turkey's widening current-account deficit, dwindling foreign reserves, geopolitical tensions and rising Covid-19 infections. Photographer: Nicole Tung/Bloomberg

(Bloomberg) -- Turkey’s central government budget swung to a deficit last month, capping the year with a 40% jump in the shortfall, as the coronavirus pandemic led to a rise in spending that outpaced revenues.

The government posted a monthly fiscal gap of 40.7 billion liras ($5.5 billion) in December, bringing the deficit for the whole of the year to 172.7 billion liras. That compares with a deficit of 31.8 billion liras in December 2019 and an annual gap of 124.7 billion liras in the whole of that year.

Key Insights

  • The monthly gap comes after a surplus in November, usually a period of strong tax income. Government bodies tend to spend more in December in order to run down their allowance, putting extra pressure on finances.
  • Spending excluding interest payments rose an annual 33% to 133.4 billion liras in December. The rise was driven by a 37% jump in current transfers, which includes payments to the social security system.
  • Tax revenue rose 29% to 78.5 billion liras in December, compared with 60.6 billion liras a year earlier.
  • Revenues rose 34% from a year earlier, indicating an increase in real terms when adjusted for consumer inflation of 14.6%.

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  • Turkey’s Treasury posted a cash budget deficit of 46.7 billion liras in December and a primary gap of 43.6 billion liras. Turkey posted a cash budget deficit of 181.8 billion liras in 2020.
  • Turkey sees the ratio of budget deficit to gross domestic product at 4.3% in 2021, according to the government’s New Economic Program