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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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Washington Urges Israel to Extend Cooperation with Palestinian Banks

A West Bank Jewish settlement is seen in the background, while a protestor waves a Palestinian flag during a protest against Israel's separation barrier in the West Bank village of Bilin in 2012. (AP)
A West Bank Jewish settlement is seen in the background, while a protestor waves a Palestinian flag during a protest against Israel's separation barrier in the West Bank village of Bilin in 2012. (AP)
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Washington Urges Israel to Extend Cooperation with Palestinian Banks

A West Bank Jewish settlement is seen in the background, while a protestor waves a Palestinian flag during a protest against Israel's separation barrier in the West Bank village of Bilin in 2012. (AP)
A West Bank Jewish settlement is seen in the background, while a protestor waves a Palestinian flag during a protest against Israel's separation barrier in the West Bank village of Bilin in 2012. (AP)

The United States on Thursday called on Israel to extend its cooperation with Palestinian banks for another year, to avoid blocking vital transactions in the occupied West Bank.

"I am glad that Israel has allowed its banks to continue cooperating with Palestinian banks, but I remain convinced that a one-year extension of the waiver to facilitate this cooperation is needed," US Treasury Secretary Janet Yellen said Thursday, on the sidelines of a meeting of G20 finance ministers in Rio de Janeiro.

In May, Israeli Finance Minister Bezalel Smotrich threatened to cut off a vital banking channel between Israel and the West Bank in response to three European countries recognizing the State of Palestine.

On June 30, however, Smotrich extended a waiver that allows cooperation between Israel's banking system and Palestinian banks in the occupied West Bank for four months, according to Israeli media, according to AFP.

The Times of Israel newspaper reported that the decision on the waiver was made at a cabinet meeting in a "move that saw Israel legalize several West Bank settlement outposts."

The waiver was due to expire at the end of June, and the extension permitted Israeli banks to process payments for salaries and services to the Palestinian Authority in shekels, averting a blow to a Palestinian economy already devastated by the war in Gaza.

The Israeli threat raised serious concerns in the United States, which said at the time it feared "a humanitarian crisis" if banking ties were cut.

According to Washington, these banking channels are key to nearly $8 billion of imports from Israel to the West Bank, including electricity, water, fuel and food.