Turkiye aims to ensure fiscal discipline and lower budget deficit: Mehmet Simsek
Business
Budget deficit in Jan-May stood at $10.12bn, more than double compared to a year go
ISTANBUL (Reuters) – Turkiye is taking measures to re-establish fiscal discipline and control the level of the budget deficit, Finance Minister Mehmet Simsek said on Sunday.
The budget deficit for the first five months of the year was 263.6 billion liras ($10.12bn), compared to 124.6bn liras a year ago due to increased spending ahead of May elections and the impact of February's earthquakes in southern Turkey.
Last month, Turkiye raised monthly minimum wage by another 34 per cent beginning on July 1, the government said on Tuesday, bringing it to a net 11,402 lira ($483) for the second half of the year in an effort to address soaring inflation.
Read more: Turkiye lifts minimum wage by 34pc to address inflation
"We will not allow permanent deterioration in public finance indicators by re-establishing fiscal discipline and taking budget deficit under control," Simsek said on Twitter.
Turkiye hiked value added tax (VAT), fees and consumer loan taxes on Friday.
Earlier this week, the central bank said the country will continue its monetary policy U-turn, which began with a sharp post-election rate hike last month, until the inflation outlook improves significantly.
Read more: Turkiye pledges to keep tightening until inflation outlook improves
A draft law being discussed in the parliament seeks to increase corporate tax to fund rebuilding efforts after February's earthquakes killed more than 50,000 people and left millions homeless in the south.
Simsek said more than 319,000 units of housing will be built and delivered within one year to people who lost their homes.
"The package, which is being discussed in the parliament, aims to reduce the impact of the additional costs caused by the earthquake on the budget. These regulations will also indirectly support taking the current account deficit under control."
On the other hand, Turkiye expects Gulf countries to make direct investments of about $10bn initially in domestic assets as part of President Tayyip Erdogan's trip to the region in two weeks, according to two senior Turkish officials.
Erdogan is scheduled to visit leaders in Saudi Arabia, Qatar and the United Arab Emirates on July 17-19, in part to drum up foreign funding that would boost Turkiye's strained economy after his re-election in May.
The sources, who spoke on condition of anonymity given the talks are private and deals are not yet finalised, said overall investments of up to $30bn are expected over a longer period in Turkiye's energy, infrastructure and defence sectors.
