Treasury reports surplus in February, but how?

Turkey’s government reported a budget surplus for a second consecutive month in February after the central bank paid out almost 50 billion liras ($3.4 billion) in dividends from its 2021 profits.

The numbers leave much to be desired in terms of transparency. It seems, Erdogan administration is doctoring budget data after Central Bank FX reserves and possibly inflation figures.

Turkey posted a budget surplus of 69.7 billion liras last month, more than triple the 23.2 billion liras surplus of February 2021, the Treasury and Finance Ministry said on Tuesday.

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The central bank paid out 49.3 billion liras in dividends and reserve funds to the government in February, which explains more than half the surplus. The expenditure side also excludes roughly $6.5 billion paid out to state NG grid operator and importer BOTAS. Also exclude are “duty losses” of state commercial lenders which are instructed to make subsidized loans to “preferred industries”.

Budget revenue increased by an annual 126 percent to 270.6 billion liras. Tax income climbed by 83.2 percent to 180.3 billion liras. Expenditure rose by 87.9 percent to 157.1 billion liras, excluding interest payments on debt, which soared 242.3 percent to 43.7 billion liras.

The increases in revenue and expenditure compared with consumer price inflation of 54.4 percent in February.

Why is Erdogan administration fudging budget numbers? The answer may be a desire to accumulate ammunition, or fiscal space as it is technically called for the next election. However, no matter what the truth is, with poverty spreading rapidly from the unemployed and lower income classes to middle income, generating surpluses instead of increasing welfare spending will do AKP no good in the polls.

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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 and has contributed to the financial daily Referans and the liberal daily Radikal.