Budget performance keeps deteriorating in September

Budget performance keeps deteriorating in September

ISTANBUL- Hürriyet Daily News
Budget performance keeps deteriorating in September

Finance Minister Şimşek (C) embraces the draft budget documents for 2013 during a press meeting. The ratio of budget deficit to the gross domestic product may hit 2.3 percent, Şimşek says.

Turkey’s central government’s budget performance continued to deteriorate in September, according to data from the first nine months of the year that was disclosed yesterday by Finance Minister Mehmet Şimşek. He also outlined the highlights of the draft budget for 2013, a significant document particularly for the government’s financial discipline during an election year.

The budget balance produced a deficit of 14.4 billion Turkish Liras in the January-September period, and a primary surplus of 25.2 billion liras in the same period of last year, Şimşek said. But the primary surplus posted a 28 percent year-on-year decline. The primary surplus was 35 billion liras last year in the January-September period.

The deterioration in the budget stemmed mainly from the slowdown in economic activity, higher than projected civil servant salary adjustments, fixed expenditures, lower than expected privatization revenues and lower overdue tax payments.

“If you consider the turmoil in the [Middle Eastern] region, deep crisis in the Eruopean Union, Turkey’s [economic performance] can be regarded as reasonable,” Şimşek said. The government recently revised the year-end growth rate from 4 percent to 3.2 percent.

The central government budget spending for 2012 is estimated at 326.7 billion liras, while the revenue is estimated at 329.2 billion liras, producing 33.5 billion liras of budget deficit, he said.

Accordingly the ratio of budget deficit to the gross domestic product (GDP) will increase to 2.3 percent from the previous estimate of 1.5 percent, he said.

“The budget deficit in September shows that deterioration in budget balance continues in autumn months. The deterioration may get worse toward the end of the year, T-Bank Chief Economist Veyis Fertekligil told Anatolia news agency.
Spending in focus
Şimşek said that the spending would be under control in 2013.

“We have taken very serious measures compared with last year to put spending under tighter control in 2013,” he said. “You will see it in the draft budget law for 2013.”

Next year’s budget is estimated to produce a 33.9 billion liras deficit, while the primary surplus is estimated at 19.1 billion liras, Şimşek said. Accordingly the budget deficit to GDP ratio target for 2013 is also revised up from 1.4 percent to 2.2 percent.

The measures taken by the government to combat with informal economy will show its effect in 2013, he said. He also stated that the draft budget includes 4.8 billion liras of deforested land sales, 4 billion liras of privatization revenues are expected to be realizes next year.

“We have allocated the largest share to education,” he said. The education budget for next year is 68.1 billion liras, up from 11.3 billion in 2001.

The investment budget will increase by 20 percent to 39.2 billion liras. The government plans to employ 79,000 public servants and spend 17.2 billion liras for social services and aid in 2013, according to the draft budget.