ECONOMY

Turkey cuts its primary surplus target to 3.5 pct

ANKARA – Turkey cut its total 2008 public sector primary surplus target to 3.5 percent from 4.2 percent, Finance Minister Kemal Unakitan said on Saturday, announcing the government’s medium-term economic road map. 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, but Unakitan said the target corresponded to 4.2 percent after an upward gross domestic product (GDP) revision by the Turkish Statistics Institute. The target had been 6.5 percent under deals with the International Monetary Fund previously. The figure in 2007 was 3.5 percent. The key primary surplus target was set at 3 percent for 2009, 2.7 percent in 2010 and 2.5 percent in 2011, Unakitan said. «The primary surplus is not a magic figure. We should not be thinking like it must stay at a certain level,» he said. He said the government also cut the central administrative primary budget surplus target to 2.7 percent for this year from a previous 3.4 percent. Turkey also reduced its central administrative budget deficit target to 1.4 percent of the gross domestic product for 2008 from an earlier target of 1.9 percent, Unakitan said. The deficit target was set at at 1.4 percent in 2009, and then projected to be 1.3 percent in 2010, 1.7 percent in 2011 and 1.6 percent in 2012, the minister said. The government aims to lower the ratio of gross public debt stock to the GDP, as defined by the European Union, to 37 percent this year and 35 percent next year from 38.8 percent in 2007, Unakitan said. He also said that the budget was on track to meet year-end targets, adding that first-quarter results which he said would be announced soon would confirm this. Turkey’s budget deficit jumped to 4.870 billion lira ($3.81 billion) in March. This created worries on financial markets that the government might not meet its year-end budget targets. Economy Minister Mehmet Simsek told the same news conference that Turkey will stick to its single-digit, low inflation goal and that price stability is crucial for the government. Simsek told a news conference that he did not see signs of a serious slowdown in the economy. «It is wrong to speak of a recession in Turkey. There are no indicators supporting this argument,» Simsek said. He also said if food and energy prices were excluded, actual inflation figures did not much deviate from the target. Slowing growth Turkey faces both rising inflation and slowing growth. Economic growth fell to 4.5 percent in 2007, versus an average 6.8 percent for 2002-2007. The target for 2008 is 5.5 percent, but many economists say it is unlikely to be attained. Turkey’s consumer prices rose 1.68 percent month-on-month in April, exceeding forecasts, for a year-on-year rise of 9.66 percent. The government has set a 4 percent inflation target for 2008. The southeastern Anatolia development project, which includes building dams and irrigation network, will gather pace and employment incentives would be launched under the government’s economic plan, Simsek said. The government would spend an additional 1 billion lira for the southeastern Anatolia project to support agriculture to curb food price inflation, he said.