hosted by
funded by
Country Report Turkey May 2011
PDF
HTMLEconomic policy: A little loosening is evident in the March budget deficit
The government has generally adopted a cautious approach to fiscal policy since the 2008-09 recession, but has broadly sought to maintain a degree of flexibility ahead of the general election on June 12th 2011. In March the central government budget swung back into deficit by TL6.1bn (US$3.9bn), following surpluses in the two preceding months. However, for the most part the deficit represents a return to more normal spending levels after the vagaries of the previous three months, when a combination of one-off factors caused government outlays to fluctuate sharply. Expenditure was surprisingly low in January and February, possibly owing to the absorption of funds disbursed in December 2010, when expenditure was particularly high. The Economist Intelligence Unit believes that a substantial portion of the large deficit in December was actually the result of cash distributed for use during the first half of 2011.
| Central government budget | |||||||||||
| (TL bn unless otherwise stated) | |||||||||||
| 2009 | 2010 | 2011 | 2010 | 2011 | |||||||
| Outturn | % GDP | % change | Outturn | % GDP | % change | Target | % GDPa | Jan-Mar | Jan-Mar | % change | |
| Total revenue | 215.5 | 22.6 | 2.8 | 254.0 | 23.0 | 17.9 | 279.0 | 23.0 | 57.0 | 68.7 | 20.5 |
| Tax revenue | 172.4 | 18.1 | 2.6 | 210.5 | 19.1 | 22.1 | 232.2 | 19.1 | 47.9 | 57.5 | 19.9 |
| Other revenue | 43.0 | 4.5 | 1.1 | 43.5 | 3.9 | 1.1 | 46.8 | 3.9 | 9.1 | 11.3 | 23.5 |
| Total expenditure | 268.2 | 28.2 | 18.1 | 293.6 | 26.6 | 9.5 | 312.6 | 25.7 | 68.4 | 72.9 | 6.6 |
| Non-interest expenditure | 215.0 | 22.4 | 21.9 | 245.3 | 22.2 | 14.1 | 265.1 | 21.8 | 53.4 | 58.9 | 10.3 |
| Interest expenditure | 53.2 | 22.6 | 5.0 | 48.3 | 4.4 | -9.2 | 47.5 | 3.9 | 15.0 | 14.0 | -6.9 |
| Budget balance | -52.8 | -5.5 | – | -39.6 | -3.6 | – | -33.5 | -2.8 | -11.3 | -4.1 | – |
| Primary balance | 0.4 | 0.1 | – | 8.7 | 0.8 | – | 14.0 | 1.1 | 3.7 | 9.8 | – |
| a Based on the government's projection for nominal GDP in 2011. | |||||||||||
| Source: Ministry of Finance General Directorate of Public Accounts. | |||||||||||
Download the numbers in Excel
The deficit in the first three months of 2011 of TL4.1bn compares favourably with both the TL11.3bn deficit of January-March 2010 and the official target of TL33.5bn for the whole of 2011. Expenditure increased by 14.3%, to TL26.8bn, in March and by 6.6% to TL72.9bn in the first quarter. The acceleration in March reflected higher spending on several items including social security subsidies, agricultural support payments and transfers to local government. The payment of increments to non-civil service pensions, backdated to January, was partly responsible for the rise in social security costs.
Revenue growth has remained strong, reflecting the continued strong economic activity. Tax receipts rose by 14.7% in March, to TL16.6bn, and by 19.9% to TL57.5bn for the three-month period. The slowdown in year-on-year tax revenue growth in March was largely attributable to a base effect affecting income tax and domestic value-added tax (VAT) payments. Revenue from special consumption tax, which is charged mainly on fuels, motor vehicles, alcohol and tobacco, was up by 23% on a year earlier at TL3.5bn, and VAT revenue from imports was 61% higher at TL2.7bn. Non-tax revenue, which includes profits transferred from state banks and privatisation receipts, was 34.8% higher at TL4.1bn.
