The central government budget continued to perform strongly in October and November, compared with 2009, when the full-year deficit reached 5.5% of GDP. The deficit in January-November 2010 was TL23.5bn compared with TL46.2bn a year earlier thanks to strong tax revenue growth. Three major indirect taxes accounted for 56% of the tax take: on a year-on-year basis, receipts from special consumption tax (SCT), which is charged mainly on petroleum products, transport vehicles, cigarettes and alcoholic drinks, rose by 31%, revenue from value-added tax (VAT) on imports increased by 38%, and domestic VAT receipts rose by 42.1%. These figures reflect partly changes in prices and adjustments in tax rates, but mainly a surge in domestic consumption. Government non-interest expenditure in the same period rose by 11.7% year on year, which represents only a modest real increase after allowing for inflation. Meanwhile, interest expenditure declined owing to the lagged effect of the sharp decline in interest rates in 2008-09. Although the budget deficit often surges in December, the figure for the whole of 2010 looks certain to come in well below both the government's estimate in October of TL44.2bn.

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