Turkey’s ex-interest budget gap widens
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Daily News with wires
Oluşturulma Tarihi: Ocak 21, 2009 00:00
ISTANBUL - Turkey’s budget deficit before interest payments more than tripled in December to 6.9 billion Turkish Liras ($4.2 billion), the Finance Ministry said.
The gap widened from 2.2 billion liras in December 2007, Bloomberg cited the ministry in Ankara as saying in an e-mailed statement yesterday. The overall budget deficit increased to 8.8 billion liras from 4 billion liras, it said.
"The headline figure is worse than I expected and it shows there was some real fiscal slippage in the last month of the year," said Yarkın Cebeci, an economist at JPMorgan Chase & Co. in Istanbul.
The economy grew 0.5 percent in the third quarter, the slowest pace in six years. In 2008, there was a budget surplus, excluding interest payments, of 33.6 billion liras, a drop of 4.1 percent from a year earlier, the ministry said. That missed the government’s target of 38 billion liras, it said.
The overall budget deficit widened by 25 percent to 17.1 billion liras last year, beating the government’s target of 18 billion liras, the ministry said.
Turkish GDP foreseen to shrink
Turkey's credit rating outlook is stable but the rating could improve over time should the economy regain its growth and also momentum towards EU membership, Reuters quoted an analyst at ratings agency Moody's as saying.
Turkey's gross domestic product is expected to shrink 0.8 percent in 2009 and its external vulnerability is quite high despite a falling current account deficit, said Moody's Investors Service lead sovereign analyst for Turkey Kristin Lindow.
The emerging market economy has been hit hard by the global financial crisis and a slump in domestic and foreign demand, and the agency expects 2008 growth of 1.8 percent - sharply below 7 percent annual levels since a 2001 financial crisis.
Lindow, in reply to questions by email, said late Monday Turkey's economic resilience was only medium, its debt affordability was low and its susceptibility to political and financial event risks were high.
Turkey is currently seeking new lending from the International Monetary Fund, or IMF, as it spends more on roads and water supplies before local elections in March to spur economic growth. The IMF has asked for budget cuts in return for the loans.
Business leaders and financial markets regard such a deal as key to restoring confidence in the economic outlook. Those concerns and growing risk aversion battered Turkish financial markets last year.
"An IMF deal is likely to increase confidence that the country has an external financing backstop in these uncertain times. The rating outlook [12-18 month time horizon] is stable," Lindow said.
"Should the economy regain its growth and EU membership momentum, the rating could improve over time," she said.
Moody's said it expected 2009 consumer price inflation of 7 percent, compared with 10.1 percent last year.
The Turkish Central Bank slashed benchmark overnight rates by a larger-than-expected 200 basis points last week, due to expectations of falling inflation, in a bid to kick-start the economy.
According to Moody's forecast, the current account deficit would amount to 2.3 percent of gross domestic product this year, falling sharply from 5.6 percent in 2008.
"Turkey's economic resilience is only medium, its debt affordability is low, and its susceptibility to political and financial event risk is assessed at high," Lindow said. Turkey is rated "Ba3" by Moody's.
"The headline figure is worse than I expected and it shows there was some real fiscal slippage in the last month of the year," said Yarkın Cebeci, an economist at JPMorgan Chase & Co. in Istanbul.
The economy grew 0.5 percent in the third quarter, the slowest pace in six years. In 2008, there was a budget surplus, excluding interest payments, of 33.6 billion liras, a drop of 4.1 percent from a year earlier, the ministry said. That missed the government’s target of 38 billion liras, it said.
The overall budget deficit widened by 25 percent to 17.1 billion liras last year, beating the government’s target of 18 billion liras, the ministry said.
Turkish GDP foreseen to shrink
Turkey's credit rating outlook is stable but the rating could improve over time should the economy regain its growth and also momentum towards EU membership, Reuters quoted an analyst at ratings agency Moody's as saying.
Turkey's gross domestic product is expected to shrink 0.8 percent in 2009 and its external vulnerability is quite high despite a falling current account deficit, said Moody's Investors Service lead sovereign analyst for Turkey Kristin Lindow.
The emerging market economy has been hit hard by the global financial crisis and a slump in domestic and foreign demand, and the agency expects 2008 growth of 1.8 percent - sharply below 7 percent annual levels since a 2001 financial crisis.
Lindow, in reply to questions by email, said late Monday Turkey's economic resilience was only medium, its debt affordability was low and its susceptibility to political and financial event risks were high.
Turkey is currently seeking new lending from the International Monetary Fund, or IMF, as it spends more on roads and water supplies before local elections in March to spur economic growth. The IMF has asked for budget cuts in return for the loans.
Business leaders and financial markets regard such a deal as key to restoring confidence in the economic outlook. Those concerns and growing risk aversion battered Turkish financial markets last year.
"An IMF deal is likely to increase confidence that the country has an external financing backstop in these uncertain times. The rating outlook [12-18 month time horizon] is stable," Lindow said.
"Should the economy regain its growth and EU membership momentum, the rating could improve over time," she said.
Moody's said it expected 2009 consumer price inflation of 7 percent, compared with 10.1 percent last year.
The Turkish Central Bank slashed benchmark overnight rates by a larger-than-expected 200 basis points last week, due to expectations of falling inflation, in a bid to kick-start the economy.
According to Moody's forecast, the current account deficit would amount to 2.3 percent of gross domestic product this year, falling sharply from 5.6 percent in 2008.
"Turkey's economic resilience is only medium, its debt affordability is low, and its susceptibility to political and financial event risk is assessed at high," Lindow said. Turkey is rated "Ba3" by Moody's.