Midterm budget programme envisages further tax cuts.

Midterm budget programme envisages further tax cuts. Minister of finance Ridvan Bode informed at the 9 th CEI economic summit on Thursday that that the midterm budget programme envisages further reduction of the taxation burden. At the same time, Bode highlighted that the government will make a decision about the details of the new fiscal programme in the middle of next year, and it will depend on the performance of the fiscal administration achieved this year. Bode hinted that the new taxation regime will be targeted towards attracting more foreign investments in the country. In line with the agreement between the government and the IMF, higher budget revenues will be spent on public investment projects (such as infrastructure upgrades) as well as reduction of the government’s internal borrowing and its domestic public debt. It should be noted that the new right-wing government elected in July last year embarked on an ambitious fiscal programme, reducing a number of levies on the corporate sector over the course of this year. While the fiscal loosening could have put a strain on state finances, preliminary data on the budget performance this year is encouraging as the budget deficits generated over the past years were reversed in to surpluses this year. According to the latest statistics of the finance ministry, the general government budget posted a surplus of EUR 50mn in the first ten months of the year. In addition, curbing the informal economy and the improved tax collection capacity of the fiscal authorities made possible the release of a supplementary budget in the middle of the year, which has been earmarked for key public investment projects. Finally, finace minister Bode projected that the general budget revenues will rise to 27.3% of GDP in 2009, compared to about 24.4% of GDP in 2005. While at the same time, public investments in 2009 will account for 7.6% of GDP in 2009, up from 4.6% of GDP in 2005.