Don’t let the budget right be orphaned
Turkey’s new constitutional political regime, “The Presidential Government System,” came into effect on July 9. The amendments approved in the 2017 referendum started to be implemented.
Under the new system, the president will submit the budget to parliament. Parliament does not have the right to change the appropriations: It has to either approve the proposed budget or reject it. If parliament turns it down, a “new budget” will be increased by the previous year’s appropriations — this increase is calculated by the revaluation rate. However, anywhere in the world, the government whose budget is rejected resigns. Such a resignation has a political meaning: The people’s will has not authorized the executive body to use the budget, it has not approved tax collection and spending the money raised by taxes.
The right to prepare the budget is one of the major forces that reflect the people’s will onto parliament. However, the amendments made in the constitution have clipped the wings of this power. The right to draft the budget, which is one the basic components of democracy and dates back to Magna Carta in 1215, will be one of most controversial issues in the Turkish parliament, because parliament is left with only one power, which is the right to reject or approve the budget. When a single party does not have a majority in parliament, the will of parliament can exercise the rights over the budget on a daily basis.
Devlet Bahçeli, the leader of the Nationalist Movement Party (MHP), which emerged as the key party in parliament, said after the results of the June 24 election came out: “The Turkish nation made the MHP the party in parliament and tasked it with the duty of providing the checks and balances.” The right to prepare the budget, even though “significantly weakened,” is still there.
The will of parliament may regularly scrutinize the budget either through the Budget Commission or through a separate “Budget Office.” Parliament may demand explanation by submitting written questions which it could share with the public. Parliament may exercise this right through the Budget Office on a regular basis as opposed to the fact that it will have only one option, which is to say “Yes” or “No” to the content of the budget once a year. Thus, parliament may create more space for itself.
One way of doing this is to inform the public regarding the budget, expenditures, revenues and taxes. Within this context, the Economic Research Forum, jointly established by the Turkish Industry and Business Association (TÜSİAD) and Koç University, has launched regular financial monitoring reports. Ferhat Emil, an academic from Bilkent University and Ankara University, analyzes the general trends in the central government budget as well as the developments in the first three months of 2018.
The budget, monitoring the budget and how expenditures are allocated are becoming increasingly important, because over the past 10 years capital movements became the main factor determining growth, inflation, exchange and interest rates. This is changing as global financial conditions change. In the coming period, economic policies will focus more on budget.
Emil’s report noted that since 2016 cash deficit has been higher than budget deficit. The second tendency Emil pointed out is that expenditures exceed allowances, which means spending money without parliament’s approval.
The report also noted the Public Private Partnership model. According to the report, in the first month of the year, 1.3 million Turkish Liras ($274 million) and 3.5 billion liras were spent on city hospitals and as revenue guarantees for bridges respectively under the “transfers to households.”