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Turkey posts record budget surplus as fiscal policy shifts: report

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Turkey recorded its largest monthly budget surplus on record as the government moves to repair public finances alongside monetary policies aimed at reducing inflation, Bloomberg reported on Thursday.

In May the central budget balance showed a 219 billion-lira surplus ($6.7 billion), the highest since data collection began in 2006. This marks a sharp turnaround from five consecutive months of deficit, according to figures released by the Treasury and Finance Ministry on Thursday.

The Turkish government is implementing tighter fiscal policies with recent measures including spending cuts and new plans such as introducing a minimum tax on companies.

These proposals, intended to generate an additional $7 billion in revenue, will be debated by lawmakers and are expected to pass given that President Recep Tayyip Erdoğan’s ruling Justice and Development Party (AKP) and its allies control a parliamentary majority.

Personnel spending and current transfers, including social aid to households, were offset by a significant increase in tax revenue, which constituted the bulk of the government’s income last month.

Despite the latest figures showing a sharp improvement, the budget remains deeply in deficit for the year, heading for a shortfall likely to be one of the largest in Erdoğan’s two decades in power.

The deficit for the first five months has reached 472 billion lira, with the government’s forecast for this year’s total deficit at 2.7 trillion lira, or 6.4 percent of gross domestic product.

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