UPDATE 1-Turkey Feb budget deficit shrinks 69 pct y/y

By Orhan Coskun

ANKARA, March 16 (Reuters) - Turkey's budget deficit shrank 69 percent year-on-year to 2.271 billion lira ($1.5 billion) in February, the Finance Ministry said on Tuesday, reined in by both higher revenues and lower expenditure.

The deficit trebled last year on the back of high spending. The government, which faces an election scheduled for July next year, has pledged to curb expenditure and boost tax revenues in order to reduce the gap.

Tax revenues grew nearly 17 percent year-on-year in February, with total budget revenues rising 8.7 percent to 20.19 billion lira, the ministry said.

Expenditure shrank 13.6 percent to 22.29 billion lira.

Analysts are wary of reading too much into monthly data which tends to be volatile, but with revenues in recovery mode there is a focus on spending to see how hard the government is trying to cut back.

Despite concerns among investors about the deficit and the government's decision not to seek an International Monetary Fund stand-by accord, Turkey has had no trouble securing financing from international capital markets.

The budget deficit stood at 52.2 billion lira in 2009, or 5.5 percent of gross domestic product, although it was below an earlier government forecast for a deficit of 63 billion lira.

The government raised some tax rates in December and is working on the introduction of 'fiscal rule' legislation which would set annual benchmarks and targets for the budget balance and government debt as a new anchor for the economy.

The budget primary surplus stood at 2.306 billion lira in February, the Finance Ministry said down 6.5 percent from a year earlier. The primary balance excludes interest payments on Turkey's debt.

The January budget deficit was 3.121 billion lira.

($1=1.529 Turkish Lira)

(Additional reporting by Simon Cameron-Moore, writing by Daren Butler, editing by Mike Peacock) Keywords: TURKEY BUDGET/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.