Having recorded the second best growth among Organization for Economic Cooperation and Development (OECD) economies with 8.9 percent last year, Turkey stands out with its stable markets among European countries. The euro slid to a fresh three-week low and stocks across Europe fell sharply as the continent's debt crisis threatened to spiral out of control, particularly in Greece, where Prime Minister George Papandreou is preparing to reshuffle his government in an attempt to get austerity measures through Parliament. Leading international rating agency Standard & Poor's cut Greece's ratings on that nation's debt by three notches, while the agency as early as this week hinted an upgrade in Turkey's sovereign credit rating provided that the country maintains stability following the elections.

The budget deficit in first five months stood at TL 233 million. May's encouraging figures come on the heels of a TL 1 billion surplus in the budget in the preceding month, the first April since 1988 to see a surplus in the budget. Observers attribute the success in the budget to the government's adherence to strict budgetary discipline. Its economic management was lauded for avoiding extra expenditures from Treasury coffers ahead of the general elections -- an old habit of past governments that sought to secure votes by increasing spending in the run-up to elections. This time around, Turkey's budget expenditures increased by 7.8 percent in May over the same month of 2010, while budget revenues enjoyed a 9.7 percent increase in the same period.

‘A tremendous success'

The minister called a robust 98 percent recovery in the budget deficit in January-May this year over the same five months of 2010 “a tremendous achievement.” Turkey spent TL 24.3 billion from its budget in the January-May period, while budget revenue in the same months reached TL 27.1 billion. Along with its shrinking budget deficit, Turkey's no-interest budget surplus -- the figure calculated when all interest expenses are assumed to be zero -- reached TL 6.9 billion in May.

“Turkey's budget revenue almost offset budget spending in the first five months. I think this is the first time the modern republic has witnessed such a small deficit in its budget during an election period. … We have faith the budget will maintain strong performance through the end of the year,” Şimşek explained. The minister said the government will most likely make a revision in its mid-term economic program to bring down the budget deficit for year-end. Turkey suffered the worst budget performance of the past decade in 2003, when the budget deficit hit TL 21.8 billion. The country's budget deficit increased to as much as TL 20.6 billion during the 2009 global financial crisis but dropped to TL 9.9 billion thanks to timely measures in 2010.

Public receivables used to pay off debt

Recalling that the state has secured a significant amount of money from the restructuring of debts owed to the state, Şimşek said the government would use most of these funds to pay off public debt. “A little portion could be used to finance projects on infrastructure, research and development [R&D] and education,” he added. Şimşek said among the infrastructure projects to receive funding from tax revenues was a new runway at İstanbul's Sabiha Gökçen Airport. The government had previously introduced an extensive debt restructuring package, covering all the state's receivables as well as outstanding tax liabilities expected to provide extra income for the Treasury's coffers.

Turkey's budget revenues in the January-May period reached TL 119.3 billion, and TL 100 billion of this came from tax revenue alone.