'Turkey's 2018 Budget Closes with TL 72.1 Billion Deficit'

* Photograph - Furkan Furuncu / Anadolu Agency

Click to read the article in Turkish

Opened on Monday (October 22) with the introduction by the Minister of Treasury and Finace Berat Albayrak of the 2019 draft budget bill before the Parliamentary Planning and Budget Commission, Turkey's annual budgetary debate is scheduled to continue in the commission until November 22, to be followed for another month of debate in the General Assembly and to be finalized by parliamentary vote on December 23.

For the first time in Turkey's parliamentary history, the draft budget bill, due to April 2017 constitutional amendment, is moved by the President, who is not a member of the parliment, and whose cabinet is not responsible before the parliament -a situtation which revokes controversies regarding the stripping of the parliament of its right to budgeting -a right what was taken over by the parliament from the Sultan in 1876.

The 2019 draft budget bill proposes huge indirect tax increases in consumer goods sales, extending from tobacco products to oil, from whiteware to motor vehicles.

The current account deficit -the major flaw in Turkey's ailing finances- would become USD 36 billion at the end of 2018 and the ratio of the current account deficit to the GDP is anticipated as around 4.7 percent, minister Albayrak said. "The ratio of the budget deficit to national income is anticipated as 1.9 percent" he added.

For the next year's budget they foresee the budgetary expenditures as TL 961 billion (approx. USD 161.3 billion), the budgetary incomes as TL 880.4 (approx. USD 153.3 billion), tax incomes as TL 756.5 billion (approx. USD 131.7 billion) and non-interest expenses TL 843.7 billion (=USD 147 billion) while anticipating a budget deficit of TL 80,6 billion (=USD 14 billion) the Treasury and Finance Minister said.

The growing interest rates in the developed countries led by the USA and the rising oil prices affected the Turkish economy negatively in terms of current balances and inflation rates, Albayrak, told to the committe members.

"Unemployment rate will be 11.3 percent"

They foresaw the unemployment rate for 2018 as 11.3, Albayrak told. "As the economy headed towards balancing we have observed a slowering in the rise of annual employment rates while unemployment rates hike. In the forthcoming period due to more pronounced economic stabilization and to decreasing domestic demand we anticipate a certain amount of increase in the uemployment rate and closing at 11.3 percent ," the minister said.

"Inflation rate predicted as 20.8 percent"

Expressing that they are targeting a gradual decrease in the inflation rate to 6 percent, "Under the impact of costwise developments the consumer inflation rate is predicted to be realized as 20.8 percent," Albayrak told to the parliamentary commission members.

Current account deficit is USD 36 billion

Underlying that the current account deficit started to fall in the second half of 2018, Albayrak said: "Due to increased energy costs and to strong domestic demand the current account deficit continued to hike until May 2018 and then tended to fall in the second half of the year due to economic stabilization. We anticipate that at the end of 2018 current account deficit will become USD 36 billion and the ratio of the current account deficit to the GDP 4.7 percent.

Pointing to the fact that the budgetary incomes as well as the budgetary expenditures have risen in 2017, Finance and Treasury Minister  Albayrak predicted that "The central administrative budgetary expenditures in 2018 will be realized as TL 821.8 billion (=USD 140 Billion) the budgetary incomes as TL 749.6 (= USD 130.5 billion), the budget deficit as TL 72.1 billion (=USD 12,56 billion), and non interest balances as TL 4.3 billion (=USD 0.75 billion)."

"We predict that the budget deficit exceeding the initial target by TL 6.2 billion (=USD 1.1 billion) will be TL 72.1 billion at the end of 2018" he said. "The ratio of the deficit to national income is anticipated to become 1.9 percent." (HA/EK)