Ozlem Derici Sengul:  January budget deficit driven by transfers to loss-making SEEs

January budget deficit at 32.2 billion TL …

The central government budget, which had a surplus of 30 billion TL in January last year, posted a deficit of 32.2 billion TL this year. The primary balance, on the other hand, reported a deficit of 10.9 billion TL, against a surplus of 44.3 billion TL last year. Thus, the 12-month total budget deficit rose from 139.1 billion TL to 201.3 billion TL.

Primary surplus decreased from 171.8 billion TL to 116.7 billion TL. In January, budget expenditures amounted to 321.3 billion TL, reaching 7.2% of the total budget, while revenues amounted to 289.1 billion TL, 7.6% of the 3.8 trillion TL projected in 2023  budget.


Increases in consumption taxes  drive the revenue side…

Tax revenues increased by 8.8% in real terms to 252.8 billion TL, while non-interest budget expenditures increased by 44.4% to 300 billion TL. The increase in tax revenues was mainly driven by special consumption tax (SCT) revenues, which grew by 27.9% in real terms to reach 44.8 billion TL, and VAT revenues, which reached 41 billion TL with a 17.3% growth.

Domestic VAT reached 41 billion TL, 20.1% of the size foreseen in the budget. The vigorous course of economic activity and domestic demand seems to have had a positive impact on VAT revenues. Considering the distribution of tax revenues, VAT from imports, which constitute 20.7 percent of total tax revenues, and SCT revenues, which constitute 17.7%, took the first place. On the other hand, while taxes on income decreased by 11.2% compared to the same month of the previous year to 58.8 billion TL, corporate tax decreased by 59.8% compared to the previous year, dropping to 9.2 billion TL.


High increase in “duty losses”…

On the expenses side, under current transfers, which grew by 44.75%, transfers to loss making State Economic Enterprises, dubbed  “duty losses“  in fiscal literature increased by 530.2% compared to the same month of the previous year; rising from 2.4 billion TL to 23.9 billion TL. While the duty loss of SEEs increased from 1.1 billion TL to 24 billion TL, Ziraat Bank’s duty loss increased from 581 million TL to 1.1 billion TL. 16 billion TL was transferred from the central government budget to natural gas grid owner and importer BOTAŞ in January. Thus, transfers to SOEs in the last 12 months increased from 186 billion TL to 187.9 billion TL. The cost of  FX protected deposit scheme, called KKM  in Turkish to the budget was 1.5 billion TL in January. Thus, the total cost increased to 94 billion TL.



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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.