Turkey ran a budget shortfall in May compared with a surplus in the same month last year, a sign authorities kept their stimulus in place to buoy the Middle East’s largest economy before a rerun of the İstanbul mayoral election later this month, Bloomberg reported on Monday.
The central government’s budget deficit was TL 12.1 billion ($2.06 billion), compared to a surplus of TL 2.7 billion in the same period a year earlier. Income rose an annual 2.2 percent and spending grew over 24 percent.
Spending excluding interest payments increased an annual 23.5 percent to TL 75.7 billion. In the meantime, revenue growth remains subdued as officials try to revive the economy, which exited a technical recession in the first quarter.
Tax income fell 2.3 percent from a year earlier in May, indicating a significant drop when adjusted for consumer inflation of about 19 percent.
Turkey’s annualized budget gap rose to TL 118.7 billion in May, bringing the ratio of the deficit to gross domestic product to 3.1 percent, using the first quarter’s annualized GDP figure of TL 3.83 trillion.
Turkey extended some tax cuts on consumer goods through June.
Earlier this month, the Treasury posted a cash budget deficit of TL 14.7 billion for May.
“We expect the central government budget deficit to rise to 4.2 percent of GDP in 2019, wider than the fiscal program assumption of 1.8 percent,” suggesting that the total financing required by Turkey will reach TL 295 billion, Goldman Sachs Group Inc. economists Murat Unur and Clemens Grafe wrote in a research note dated June 4.