ANKARA Turkey on Wednesday detailed a 2001 budget targeting strong privatization and tax revenues to produce a record low deficit in support of its $4 billion pact with the International Monetary Fund to cut high inflation.
Finance Minister Sumer Oral told reporters Turkey would use tax revenues of 31,777 trillion lira to record a budget deficit of 5,233 trillion lira and a primary surplus of 11,447. That shortfall would be the smallest in real terms in recent memory.
The IMF and analysts have welcomed Turkey's pledges of fiscal rectitude to back up plans to cut inflation from about 50 percent annually in September to single digits by end-2002, but sceptics question the revenue side of the budget.
Oral said the partners in Turkey's coalition government would meet soon to agree on measures needed to achieve the targeted revenue.
We will announce the exact situation on additional measures to the public before the end of this week," Oral said, confirming that revenue to be secured by the additional steps was budgeted in the 31,777 trillion lira tax revenues.
A draft copy of the budget obtained by Reuters on Wednesday shows the government aims to shrink the budget deficit to about 3.4 percent of gross national product (GNP) from a projected deficit of around 10 percent by the end of 2000.
It also targets revenues of 43,127 trillion lira against expenditures of 48,360 trillion lira, as well as interest payments of 16,680 trillion lira.
It foresees transferring some 2,427 trillion lira revenue from the planned block sale of landline monopoly Turk Telekom and income from other telecoms licence sales to the general budget.
Proposals to sell up to 29 percent of the company, which Turkey expects to be worth some $10 billion, have foundered, and Turkish officials have acknowledged concerns about management rights may be deterring investors.
Oral said Turkey targeted an average dollar/lira exchange rate of 714,000 in 2001, compared to 676,813 on Wednesday afternoon.
The country plans to let the currency fluctuate in a widening currency band from the middle of 2001 as a step toward a free exchange system by the end of 2002.
He added that the end-September 2000 primary surplus was 7,553 trillion lira and the budget deficit 10,034 trillion lira.
Widening the tax base has long been urged as a measure to support fiscal reform in Turkey, though collection remains uneven.
Turkish officials on Monday announced the budget would provide a 10 percent pay increase in the first half of 2001 for civil servants, with a possible raise if there is deviation from the inflation targets for that period.
Labor leaders derided the proposal as a "policy to mock workers".
(Reuter)