Turkey plugs bleeding budget with large central bank

19 August, 2019 12:00 AM printer

Istanbul: The Turkish government plugged its deteriorating finances in July with an outsize cash infusion from the central bank.

The monetary authority transferred around 22 billion liras ($3.94 billion) to the Treasury last month, the biggest deposit since an annual dividend payment in January, according to data on its website. Without the disbursement, the government would have posted a budget deficit of about 12 billion liras, instead of a 9.9 billion lira surplus reported on Thursday, report agencies.

The central bank outlay comes amid an economic slowdown that has dented tax revenue, prompting the government to seek other sources of income to finance its widening deficit. Last month, the government passed a law allowing it to tap around 40 billion liras of central bank cash held in its so-called lira reserve fund, a pool of money set aside by the policymaker for use in extraordinary circumstances.

Turkey’s budget deficit is set to widen to 3.7 per cent of output by the end of the year, the biggest shortfall since at least 2012, according to the median estimate in a Bloomberg survey of economists.