Turkey July budget details: Savings for disinflation; what savings?
fiscal-policy-scaled
Turkey’s budget balance posted 96,8 billion liras deficit in July 2024 compared to 48,6 billion surplus recorded last July. Hence the year-to-date deficit reached 844 billion liras that is 94% above last year’s 434,7 billion liras deficit recorded in the first seven months of 2023.
Central government revenues were up 45% in July, weak compared to 91% yoy recorded in the first seven months reflecting the slowdown in economic activity. Especially the weak 20%yoy rise in consumption taxes with a 27% contraction in VAT is worth stressing for July. In seven month cumulative terms, taxes on consumption of goods and services are up by 103% and the VAT is +120% yoy. Both figures reflecting the strength of domestic demand in 1H24.
As of July, total expenditures are 82% higher than July 2023 with goods and services procurements up by 116% yoy along with a striking capital spending spike to a tune of 196% yoy. For the first seven months of 2024 the corresponding items are 72,7% and 129% higher compared to the same period of 2023, respectively.
The interest bill is not surprisingly is 145% higher in July yoy and up by 113% during the January-July 2024 period.
The AKP government’s fiscal policy is far from disinflationary. The announced savings measures in 2Q24 are not being implemented as both current and capital expenditures keep skyrocketing.
