Turkey's budget deficit surged to 52.2 billion lira ($36 billion) last year, much lower than a previous estimate but triple the 2008 shortfall, the finance ministry said on Friday. The gap was equivalent to 5.5 percent of gross domestic product, Finance Minister Mehmet Simsek said.
The government had forecast a deficit of 63 billion lira, or 6.6 percent of GDP, for 2009 when Turkey is expected to register one of the biggest contractions in its history.
Simsek noted a recovery in the economy in the final quarter of last year, and he said economic growth in 2010 would be "well above" the official 3.5 percent projection. "The budget results have showed better results in recent months than we had expected," Simsek said. "The budget performance for 2009 provides us a good base and this may help us meet 2010 targets."
He said Turkey managed to raise its tax revenues despite the stimulus measures it took to revive sluggish economic activity and combat the fallout of the global economic crisis.
Economists pointed out that higher transfers to social security institutions contributed to a large budget deficit as the economic contraction and unemployment lowered premium collection.
Separately, the Turkish Statistics Institute said the unemployment rate fell to 13.0 percent in the September-November period, providing support for expectations of a gradual economic recovery. The jobless rate had stood at 13.4 percent between August and October. The Turkish economy fell into a deep recession last year but has shown signs of regaining the momentum which generated strong growth in the years since a 2001 financial crisis.
Resumption of growth will help tax collection and the budget balance this year.
"Economic recovery will be helping the central government budget through both stronger tax revenues and lower cyclical expenditures such as social security transfers," Finansbank said in a note.
"Following the tax adjustment announced on December 31, we are now more confident regarding the attainability of the 2010 tax revenue target," Finansbank said.
The government raised tax rates in December, triggering steep price hikes in petrol, cigarette and some alcoholic drinks. It also raised motorised vehicle tax and some government fees. Economists have said Turkey's debt roll-over ratios would fall if it signs a loan deal with the International Monetary Fund after 20-month long talks, though the country does not need an emergency bail-out.
The budget deficit in Dec 2009 alone was 5.9 billion lira, falling 36 percent from the same month in 2008. The primary deficit stood at 4.8 billion lira in the same month, versus 7.289 billion lira in Dec 2008.
Turkey generated 1.825 billion lira in privatisation revenues in 2009, far below a budgeted 12 billion lira, Simsek said. He also said that tax revenues reached 172.4 billion lira, above expectations, and that transfers to social security bodies totalled 52.7 billion lira.