Turkey postpones fiscal reforms

Turkey’s government has signalled a delay in fiscal reforms, with moves to cut the deficit not going ahead until 2012.

That would give the ruling AK party more spending flexibility ahead of next year’s national elections.

Turkey’s Industry Minister Nihat Ergun said legislation is being delayed because some government ministries are opposed to targets which include cutting the budget deficit to one per cent of gross domestic product within 10 years.

Last year it was 5.5 percent of GDP, but it has been rising this year.

The news sparked warnings from credit rating agencies. Fitch said Turkey would “somewhat tarnish its fiscal credibility” if it delays the decision to limit spending.

The Turkish currency, the lira, fell in value against the dollar and shares slipped in Istanbul.

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