Turkey: The budget deficit decreases in October with the support of tax income
According to the October budget data announced by the Ministry of Treasury and Finance; The budget balance, which had a deficit of 29.7 billion TRY in September 2020, had a deficit of 4.9 billion TRY in October 2020. The budget had a deficit of 14.9 billion TRY in the same period last year.
As stated in the Monthly Budget Realizations Report, the primary deficit, which was 8.1 billion TRY in October 2019, was 6.9 billion TRY primary surplus in October 2020. Budget revenues increased by 41.9% between October 2019 and October 2020 and reached 92.8 billion TRY, while budget expenditures increased by 21.6% and reached 97.7 billion TRY in the same period. In the similar period, tax revenues increased by 40.4% thanks to the high income from SCT (special consumption tax) and VAT (value added tax), even though a series of loancampaigns by state banks started to come to an end gradually and reached 76.6 billion TRY. Budget expenditures excluding interest, on the other hand, increased by 16.9% with a 25% increase in current transfers including payments made to the social security system and amounted to 85.9 billion TRY.
When we look at the 2020 cumulative data; It was seen that the budget had a deficit of 145.5 billion TRY in January – October period. It is seen that the budget, which had a deficit of 100.7 billion TRY in the 10-month period of the previous year, displayed a more negative image compared to the previous year. While 12.4 billion TRY primary deficit was realized in January – October 2019, 25.9 billion TRY primary deficit was realized this year. Budget revenues increased by 14.3% between January – October 2019 and January – October 2020 to 822.2 billion TRY, while budget expenditures increased by 18% to 967.7 billion TRY in the same period. In the similar period, the increase in tax revenues was realized as 21.4% and reached 655.3 billion TRY. Non-interest budget expenditures increased by 15.9% and reached 848.1 billion TRY.
The strong increase in tax revenues in October was effective in the periodic decrease in the deficit through its support to budget revenues. During the period of strong economic activity, the income from indirect taxes increased along with the rise in consumption and increased import taxes. It is seen that the reflection of previously deferred tax payments on budget accounts in October supports the increase in revenues. On the other hand, the elimination of the one-off income effect, continuing incentives to support economic activity, and the slowdown in the economy due to epidemic or tightening in financial conditions may limit budget revenues. The new period policies to be implemented by the new economy administration within the framework of its approach to fiscal discipline will have a determining effect. In the New Economy Program announced by the government at the end of September, the budget deficit / GDP ratio was predicted as 4.9% in 2020 and 4.3% in 2021..
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