Turkey's budget widened to a record deficit in June, according to official data Monday that comes as the government embarked on a path to bolster coffers, hiking taxes and requesting institutions to review their expenditures.
The central government budget shortfall in June reached TL 219.6 billion (nearly $8.4 billion), the Treasury and Finance Ministry data showed, seven times the deficit a year earlier. It compared with a TL 118.9 billion surplus the previous month.
The primary deficit, which excludes interest payments, widened to TL 182.3 billion, from TL 18.29 billion a year earlier, according to the data. In the first half, the gap amounted to TL 483.2 billion.
The budget has been mainly strained by a sharp increase in spending to rebuild the southeastern region that was devastated by earthquakes in early February.
Meanwhile, a circular signed by Treasury and Finance Minister Mehmet Şimşek has been sent to all state institutions reminding them of the need to make savings, reduce bureaucracy and use resources effectively.
"We will rationalize public expenditure," Şimşek said on Twitter, sharing a link to the Anadolu story.
Budget revenues came in at TL 268.2 billion in June, versus expenditures that reached TL 487.9 billion, the Treasury data showed. Non-interest expenses totaled TL 450.5 billion, while interest payments reached TL 37.4 billion. Tax revenues reached TL 231.2 billion.
In January-June, revenues reached TL 1.9 trillion, compared to expenditures that amounted to TL 2.4 trillion.
The circular by Şimşek called for reviewing all expenditures except those related to the quakes that claimed over 50,000 lives.
The disaster toppled hundreds of thousands of buildings, left millions homeless and severely damaged the southeastern region's infrastructure. Business groups, economists and the government have said rebuilding could cost more than $100 billion.
As part of moves to boost revenues, Turkey almost tripled the petrol tax on Sunday, which the government said would help cover the financing needs of post-earthquake rebuilding.
Turkey's parliament has also approved an extra budget of TL 1.12 trillion for this year, which followed various other recent tax increases among efforts to bolster government coffers, including a two percentage point increase to value-added tax (VAT) and a five percentage point hike to corporate tax.
While aimed at tackling the budget deficit, the tax hikes stoke inflation, which declined to 38.21% in June from a 24-year high of 85.51% last October.
Economists said month-over-month inflation could reach double digits in July, with the impact of tax hikes also to be felt in August, Daily Sabah reports.
