Turk deficit drops lower

ANKARA (Reuters) – Turkey’s Finance Ministry has nearly halved its forecast for the 2007 budget deficit due to high non-tax revenues, including privatization proceeds. A ministry report revised the deficit forecast to 8.527 billion lira, down from 16.83 billion lira (-9.19 billion). The revised figure corresponds to 1.3 percent of gross national product (GNP). While the government had expected 30 billion lira in non-tax revenues for the whole year, it has overshot the projection and collected 24.2 billion lira in the first six months alone. Now it expects non-tax revenues to rise to 35.5 billion lira at the end of the year, and officials say the cash flowing into treasury coffers from the privatization of state assets is a major factor in the excess in non-tax revenues. According to the report, released late on Tuesday, the forecast for the country’s central government budget primary surplus was raised to 6.8 percent of GNP from 5.7 percent, according to the Finance Ministry’s definition. The newly re-elected government plans to introduce new spending cuts to meet the revised budget target for 2007 and those new measures will be introduced gradually, a senior economic official told Reuters. The official, who declined to be named, said the new measures would meet the central bank’s call on the government to take fiscal measures to meet a key target of a 6.5 percent ratio between the overall public sector primary surplus and GNP. He declined to give further details, but said the government did not overspend to finance its election campaign but only moved some expenditures to earlier into the year.