Turkey posts Nov surplus

ANKARA (Reuters) – Turkey posted a central government budget surplus of 2.561 billion lira ($2.19 billion) in November and a primary surplus of 4.837 billion lira, Finance Minister Kemal Unakitan said yesterday. The figures showed Turkey is on track to meet end-2007 targets and Unakitan said the central government deficit would end the year at less than 2.5 percent of gross national product. In November last year there was a surplus of 3.850 billion lira and a primary surplus of 7.117 billion lira. The primary budget surplus excludes interest payments on debt and is one of the measures watched by the International Monetary Fund, which urges Turkey to cut debt and keep spending on a tight rein as part of a $10 billion loan program. Unakitan reiterated a commitment to fiscal discipline and pledged to continue supporting the central bank’s fight against inflation with fiscal policies – key as the central bank has said public spending is one factor which will determine further cuts to Turkey’s very high interest rates. But the finance minister said measures which hamper growth should be avoided. Data on Monday showed Turkey’s gross national product grew only 2 percent year-on-year in the third quarter. The economy had been averaging annual growth of around 7 percent, but sharp rate hikes last year have crimped demand. The weaker level of growth will affect Turkey’s 5 percent year-end target, Unakitan said, adding growth could improve in the last quarter of 2007. Economy Minister Mehmet Simsek also said on Tuesday the fall in growth was not a «lasting shock.» In the January to November period the primary surplus was 37.248 billion lira, while the central government budget ran a 9.715 billion lira deficit. That compared with a primary surplus of 44.131 billion lira and a budget surplus of 63.6 million lira at the same time last year. The government had set a year-end budget deficit target of 16.830 billion lira and a primary surplus target of 36.116 billion. It has since revised those targets to 14.884 billion lira and 34.116 billion lira respectively. Simsek also said the government aimed to cut net public debt to 25 percent of gross national product, without giving a time frame. The pro-business AKP government said in November that ratio would end this year below 40 percent. Simsek also reiterated government plans to reduce the gaping current account deficit, which is seen as a major weak spot and makes Turkish assets vulnerable when global liquidity shrinks.