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Türkiye Aims to Ensure Fiscal Discipline and Lower Budget Deficit

Mirza Ozbag, 44, a vendor, waits for customers at his stall at a fresh market in Istanbul, Türkiye July 5, 2023. (Reuters)
Mirza Ozbag, 44, a vendor, waits for customers at his stall at a fresh market in Istanbul, Türkiye July 5, 2023. (Reuters)
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Türkiye Aims to Ensure Fiscal Discipline and Lower Budget Deficit

Mirza Ozbag, 44, a vendor, waits for customers at his stall at a fresh market in Istanbul, Türkiye July 5, 2023. (Reuters)
Mirza Ozbag, 44, a vendor, waits for customers at his stall at a fresh market in Istanbul, Türkiye July 5, 2023. (Reuters)

Türkiye is taking measures to re-establish fiscal discipline and control the level of the budget deficit, Finance Minister Mehmet Simsek said on Sunday.

The budget deficit for the first five months of the year was 263.6 billion lira ($10.12 billion), compared to 124.6 billion lira a year ago due to increased spending ahead of May elections and the impact of February's earthquakes in southern Türkiye.

"We will not allow permanent deterioration in public finance indicators by reestablishing fiscal discipline and taking budget deficit under control," Simsek said on Twitter.

Türkiye hiked value added tax (VAT), fees and consumer loan taxes on Friday.

A draft law being discussed in the parliament seeks to increase corporate tax to fund rebuilding efforts after February's earthquakes killed more than 50,000 people and left millions homeless in the south.

Simsek said more than 319,000 units of housing will be built and delivered within one year to people who lost their homes.

"The package, which is being discussed in the parliament, aims to reduce the impact of the additional costs caused by the earthquake on the budget. These regulations will also indirectly support taking the current account deficit under control."

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Saudi Transport, Logistics Sector Set for 10% Growth in Q2

An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
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Saudi Transport, Logistics Sector Set for 10% Growth in Q2

An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)

As Saudi companies start reporting their Q2 financial results, experts are optimistic about the transport and logistics sector. They expect a 10% annual growth, with total net profits reaching around SAR 900 million ($240 million), driven by tourism and an economic corridor project.

In Q1, the seven listed transport and logistics companies in Saudi Arabia showed positive results, with combined profits increasing by 5.8% to SAR 818.7 million ($218 million) compared to the previous year.

Four companies reported profit growth, while three saw declines, including two with losses, according to Arbah Capital.

Al Rajhi Capital projects significant gains for Q2 compared to last year: Lumi Rental’s profits are expected to rise by 31% to SAR 65 million, SAL’s by 76% to SAR 192 million, and Theeb’s by 23% to SAR 37 million.

On the other hand, Aljazira Capital predicts a 13% decrease in Lumi Rental’s net profit to SAR 43 million, despite a 44% rise in revenue. This is due to higher operational costs post-IPO.

SAL’s annual profit is expected to grow by 76% to SAR 191.6 million, driven by a 29% increase in revenue and higher profit margins.

Aljazira Capital also expects a 2.8% drop in the sector’s net profit from Q1 due to lower profits for SAL and Seera, caused by reduced revenue and profit margins.

Mohammad Al Farraj, Head of Asset Management at Arbah Capital, told Asharq Al-Awsat that the sector’s continued profit growth is supported by seasonal factors like summer travel and higher demand for transport services.

He predicts Q2 profits will reach around SAR 900 million ($240 million), up 10% from Q1.

Al Farraj highlighted that the India-Middle East-Europe Economic Corridor (IMEC), linking India with the GCC and Europe, is expected to boost sector growth by improving trade and transport connections.

However, he warned that companies may still face challenges, including rising costs and workforce shortages.