Ankara set to cut primary surplus targets

ANKARA – Turkey will cut its primary surplus targets under a medium-term economic plan but this should not harm fiscal discipline, Finance Minister Kemal Unakitan said yesterday. Unakitan told Reuters that the plan would be announced over the weekend, but added only that he might also reveal the new primary surplus targets then. Turkey has set a 2008 target for the primary surplus, which excludes interest payments on government debt, of 5.5 percent of gross domestic product. Previously, the target had been 6.5 percent under deals with the International Monetary Fund. «The primary surplus is connected to the debt structure. Turkey’s debt has fallen… and it will be lowered further within the framework of a new plan. Reducing the primary surplus should not mean a deterioration in fiscal discipline,» Unakitan said. Turkey’s budget deficit, which includes debt repayments, jumped to 4.870 billion lira ($3.81 billion) in March. This created jitters in financial markets that the government might not meet its year-end budget targets. Unakitan said he would announce the government’s medium-term economic plan together with Economy Minister Mehmet Simsek on the weekend. He also said the government had no plans to cut special consumption tax on certain white goods categories. The government will boost its spending as a measure against the credit crunch in world markets, a senior economic official said. «Expenditure will somewhat be raised… At the same time, the government plans to take revenue-boosting measures. All of these (measures) aim to protect Turkey from the developments in the world economy,» said the same official, who declined to be named. The International Monetary Fund, which has a $10 billion loan deal with Turkey, is aware of the government plans which should help stimulate growth and fight a slowdown in the economy, the official said. Turkey faces both rising inflation and slowing growth. «In order not to have a recession in the economy, additional spending which might not reach even 1 percent of the gross domestic product should be made,» the official said.