Turkish lira/Bloomberg

Economy

Turkey plugs bleeding budget with large central bank transfer

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Economists expect Turkey’s budget deficit to widen to 3.7 per cent of output by the end of the year, the biggest shortfall since at least 2012.

Sunday 18, August 2019

The Turkish government plugged its deteriorating finances in July with an outsized cash infusion from the central bank, reported Bloomberg.

The monetary authority transferred around TRL 22 billion ($3.94 billion) to the Treasury last month, the biggest deposit since an annual dividend payment in January. Without the disbursement, the government would have posted a budget deficit of about TRL 12 billion, instead of a TRL 9.9 billion lira surplus reported last week.

The central bank outlay comes amid an economic slowdown that has dented tax revenue, prompting the government to seek other sources of income to finance its widening deficit. Last month, the government passed a law allowing it to tap around TRL 40 billion of central bank cash held in its so-called lira reserve fund, a pool of money set aside by the policy maker for use in extraordinary circumstances.

While tax income rose an annual 7.3 per cent in July, when adjusted for consumer inflation running at 16.7 per cent, revenue slumped for an eleventh straight month, the longest streak in 10 years.

TAGS : lira , Turkish treasury, TCMB, budget deficit

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