Download 6. P F

Central Bank of the Republic of Turkey
6. Public Finance
The budget performance displayed a significant year-on-year improvement in 2013 (Chart 6.1).
This is attributed to the surge in budget revenues, which is owed to robust domestic demand,
temporary one-time revenues and some tax adjustments. In 2013, the ratio of EU-defined nominal debt
stock to GDP, which declined during 2010 and 2012, remained unchanged from 2012 (Chart 6.2).
Chart 6.1
Chart 6.2
Central Government Budget Balance
EU-Defined Public Debt Stock
(Percent of GDP)
( Percent of GDP)
Public Debt Stock
Maastricht Criterion: 60%
60
6
6
40
40
3
20
20
0
0
0
2016*
2015*
2013
2014*
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2016*
2015*
2013
2014*
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
30
60
33
9
3
80
31
9
1.1
80
1.9
12
1.6
12
* MTP targets for 2014-2016.
Source: Ministry of Finance, MTP (2014-2016).
Budget performance displayed a favorable outlook in the first quarter of 2014. Tax revenues also
surged amid rising primary expenditures in the same period. The favorable course of tax revenues in this
quarter is attributed to tax adjustments in early 2014, exchange rate and price developments and
advance spending on consumption goods before the implementation of the adopted macro
prudential measures to restrict domestic demand.
The favorable budget performance in the first quarter of 2014 notwithstanding, it is critical that
the fiscal policy be implemented in line with the MTP’s projections and the primary expenditures be
kept under control for the rest of the year as well.
6.1. Budget Developments
The central government budget posted a deficit of 1.5 billion TL, while the primary budget
registered a surplus of 12.5 billion TL in the first quarter of 2014 (Table 6.1.1). Despite the quarterly decline
in interest expenditures, the growth of tax revenues lagged behind the rate of increase in primary
expenditures, thereby leading to a slight increase in the budget deficit compared to 2013. As of the first
quarter of 2014, tax revenues have been on a target-consistent path, while primary expenditures have
been growing notably above the targeted rate of increase.
Inflation Report 2014-II
69
Central Bank of the Republic of Turkey
Table 6.1.1.
Central Government Budget Aggregates
(Billion TL)
JanuaryMarch
2013
JanuaryMarch
2014
Rate of
Increase
(Percent)
Actual/Target
(Percent)
Targeted
Annual Rate of
Increase
(Percent)
95.0
15.1
79.9
105.8
14.0
91.8
11.3
-7.8
15.0
24.2
26.9
23.9
7.0
4.0
7.4
94.1
77.4
13.4
-0.9
14.3
104.3
85.1
15.2
-1.5
12.5
10.8
10.0
12.9
69.1
-12.6
25.9
24.4
34.0
4.6
66.5
3.5
6.8
-10.8
-
Central Government Budget
Expenditures
Interest Expenditures
Primary Expenditures
Central Government Budget
Revenues
I. Tax Revenues
II. Non-Tax Revenues
Budget Balance
Primary Balance
Source: Ministry of Finance.
The central government budget deficit to GDP ratio, which declined to 1.2 percent in 2013 amid
the favorable budget performance, is estimated to remain unchanged in the first quarter of 2014
(Chart 6.1.1). Meanwhile, the primary budget surplus to GDP ratio assumed an upward course after
declining to 1.1 percent in the third quarter of 2012. This ratio, which hit 2 percent at end-2013, is
estimated to reach 1.9 percent in the first quarter of 2014.
Chart 6.1.1.
Chart 6.1.2.
Central Government Budget Balance
Central Government Budget Revenues and Primary
Expenditures
(Annualized, Percent of GDP)
(Annualized, Percent of GDP)
7
Budget Balance
Primary Balance
Budget Revenues
Primary Expenditures
7
26
5
5
24
24
3
3
22
22
1
1
20
20
-1
-1
-3
-3
18
18
-5
-5
16
16
-7
14
-7
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1*
2008
2009
2010
2011
2012
2013 2014
26
14
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1*
2008
2009
2010
2011
2012
2013 2014
* Estimate.
Source: Ministry of Finance.
Having surged dramatically since 2012 and reaching 22.9 percent at end-2013, the central
government primary expenditures to GDP ratio is estimated to hit 23 percent in the first quarter of 2014.
On the other hand, the central government budget revenues to GDP ratio increased upon robust
economic activity as well as tax adjustments in September 2012 and January 2013, reaching 24.9
percent at end-2013. The ratio is estimated to remain at 24.9 percent in the first quarter of the year.
The central government primary budget expenditures, which started to surge as of the second
half of 2012, increased further in the first quarter of 2014. Accordingly, the central government primary
budget expenditures registered a year-on-year increase of 15 percent in this period (Table 6.1.2).
In the first quarter of 2014, current transfers, personnel expenditures and purchase of goods and
services, which are major items in primary expenditures, registered a year-on-year increase of 9.8
percent, 17.1 percent and 17.8 percent, respectively. Among current transfers, expenditures on health,
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Inflation Report 2014-II
Central Bank of the Republic of Turkey
pension and social benefits registered a relatively slower rate of increase, while the increase in
agricultural subsidies and shares reserved from revenues pulled the overall rate of increase in current
transfers higher. The increase in personnel expenditures by sub-items indicates an 18.7 percent and 17.9
percent rise in expenditures for officers and workers, respectively. As for other expenditure items, the
dramatic surge in capital expenditures and capital transfers was noteworthy in the first quarter of 2014.
Road construction expenditures played a major role in the increase in capital expenditures.
Table 6.1.2.
Central Government Primary Expenditures
(Billion TL)
Primary Expenditures
1. Personnel Expenditures
2. Government Premiums to SSI
3. Purchase of Goods and Services
4. Current Transfers
a) Duty Losses
b) Health, Pension and Social Benefits
c) Agricultural Support
d) Shares Reserved from Revenues
5. Capital Expenditures
6. Capital Transfers
7. Lending
JanuaryMarch 2013
79.9
25.1
4.2
5.4
37.9
0.5
19.1
2.8
10.2
4.1
0.4
2.7
JanuaryMarch 2014
91.8
29.4
5.0
6.4
41.6
0.8
20.2
3.6
11.3
5.7
1.0
2.8
Rate of
Increase
(Percent)
15.0
17.1
18.9
17.8
9.8
62.5
5.4
30.3
10.6
37.8
159.9
1.0
Actual/Target
(Percent)
23.9
26.7
26.7
16.9
25.5
18.5
26.2
37.2
23.9
15.4
15.4
36.0
Source: Ministry of Finance.
In the first quarter of 2014, the central government general budget revenues recorded a yearon-year increase of 10.4 percent (Table 6.1.3). In the same period, tax revenues and non-tax revenues
increased by 10 percent and 12.9 percent, respectively.
Table 6.1.3.
Central Government General Budget Revenues
(Billion TL)
General Budget Revenues
I-Tax Revenues
Income Tax
Corporate Tax
Domestic VAT
SCT
VAT on Imports
II-Non-Tax Revenues
Enterprises and Property Revenues
Interests, Shares and Fines
Capital Revenues
JanuaryMarch 2013
JanuaryMarch 2014
Rate of Increase
(Percent)
Actual/Target
(Percent)
90.8
77.4
14.2
7.8
9.4
18.0
14.8
13.4
1.6
6.4
5.0
100.3
85.1
17.7
7.2
10.8
18.6
15.9
15.2
2.4
8.5
3.0
10.4
10.0
25.0
-7.6
15.0
3.3
7.7
12.9
52.7
32.6
-40.5
25.5
24.4
25.0
23.1
27.3
20.8
24.6
34.0
29.3
32.5
34.0
Source: Ministry of Finance.
A closer analysis of tax revenues reveals that income tax revenues displayed high-rated
increases in the first quarter of 2014, whereas corporate tax revenues declined. As for consumptionbased tax revenues, the VAT revenues performed well, while SCT revenues registered a slight rise. The
details of SCT revenues show a 19.6 percent and 7 percent increase in tax revenues on tobacco
products and motor vehicles, respectively. On the other hand, tax revenues on petroleum and natural
gas products decreased by 4.2 percent.
Having turned positive amid tax hikes in September 2012 as well as the base effect, the annual
rate of increase in real tax revenues started to slacken in the second half of 2013 and reached 1.9
Inflation Report 2014-II
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Central Bank of the Republic of Turkey
percent in the first quarter of 2014 (Chart 6.1.3). Consumption-based tax revenues increased drastically
in 2013 on the back of the adopted tax regulation, the relatively robust economic activity and also
BOTAŞ payments. In the first quarter of 2014, domestic VAT revenues continued to increase in real
terms, while SCT revenues declined (Chart 6.1.4).
Chart 6.1.3.
Chart 6.1.4.
Real Tax Revenues
Real VAT and SCT Revenues
(Annual Percent Change)
(Annual Percent Change)
25
25
60
20
20
50
15
15
10
Real Domestic VAT Revenues
Real SCT Revenues
Real VAT Revenues on Imports
60
50
40
40
30
30
10
20
20
5
5
10
10
0
0
0
0
-10
-10
-20
-20
-30
-5
-5
-10
-10
-30
-15
-15
-40
2008
2009
2010
2011
2012
-40
1234123412341234123412341
1234123412341234123412341
2008
2013 2014
2009
2010
2011
2012
2013 2014
Source: Ministry of Finance.
6.2. Developments in the Public Debt Stock
Public debt stock indicators displayed a favorable outlook in the first quarter of 2014. The ratio of
total public net debt stock to GDP continued to decline, while the average maturity of the debt stock
extended.
The central government debt stock stands at 598.2 billion TL as of March 2014 (Chart 6.2.1). The
ratio of total public net debt stock to GDP decreased by 4.3 percentage points, while the ratio of the
EU-defined general government nominal debt stock to GDP increased by 0.1 percentage points
compared to end-2013 figures (Chart 6.2.1).
Chart 6.2.1.
Chart 6.2.2.
Public Debt Stock Indicators
Composition of the Central Government Debt Stock
(Percent)
Total Public Net Debt Stock (percent of GDP)
80
700
FX-Denominated/FX-Indexed*
Floating-Rate
100
100
600
60
31.2
598.2
70
Fixed-Rate
80
31.6
EU-Defined Central Government Nominal Debt Stock
(percent of GDP)
Central Government Total Debt Stock (billion TL, right axis)
80
300
12.7
30
20
60
32.6
400
40
200
20
100
10
0
0
2003
2005
2007
2009
2011
2013
60
40
0
36.3
40
36.2
36.3
50
32.1
500
20
0
2001
2003 2005
2007
2009
2011
2013
* FX-Denominated/FX-Indexed debt stock includes external debt stock and FX-denominated and FX-indexed domestic debt stock.
Source: Treasury.
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Inflation Report 2014-II
Central Bank of the Republic of Turkey
The share of fixed-rate securities in the total debt stock remained almost unchanged from 2013
(Chart 6.2.2). As for the interest and exchange rate structure of domestic borrowing in 2013, the share
of fixed-rate securities registered a year-on-year decline, while the share of floating rate securities
increased slightly in the first two months of the year. The ratio of public deposits to average monthly
debt service stands at 196.5 percent. The average term-to-maturity of the domestic debt stock rose
slightly to 50.4 months (Chart 6.2.3). Meanwhile, in the first quarter of 2014, external borrowing by bond
issues amounted to 4 billion USD, with the average maturity standing at 18 years (Chart 6.2.4).
Chart 6.2.3.
Chart 6.2.4.
Average Maturity of the Domestic Cash Borrowing
and Term-to-Maturity of the Domestic Debt Stock
Borrowing By Bond Issue
(Month)
External Borrowing (billion USD, right axis)*
Average Maturity of External Borrowing (year)
Maximum Maturity of External Borrowing (year)
Average Maturity of Domestic Debt Stock
Average Maturity of Domestic Cash Borrowing
75
75
66.5
50.4
60
35
8
7
30
60
6
25
5
45
45
20
30
30
15
4
3
10
2
15
2013
2014/3
2012
2011
2010
2009
2008
2007
2006
2005
2004
0
2003
0
2001
2013
1
2014/3
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
2000
0
5
2002
15
* External borrowing during the relevant year.
Source: Treasury.
The domestic debt rollover ratio stood at 91.6 percent at end-February 2014 (Chart 6.2.5).
Having plummeted from early 2009 to early 2011, the average real interest rate at discount auctions
continues to surge due to the recent global financial fluctuations and the cautious monetary policy
stance (Chart 6.2.6).
Chart 6.2.5.
Chart 6.2.6.
Total Domestic Debt Rollover Ratio
Average Maturity of the Borrowing and Interest
Rates at Discount Auctions
(Percent)
Maturity (day)
Average Compounded Interest Rate (right axis)
110
110
100
100
91.6
90
90
84.5
Real Interest Rate (right axis)
30
600
25
500
20
400
15
300
10
200
5
100
0
80
70
70
2003
2005
2007
2009
2011
2013
0
-5
1203
0604
1204
0605
1205
0606
1206
0607
1207
0608
1208
0609
1209
0610
1210
0611
1211
0612
1212
0613
1213
80
700
Source: Treasury, CBRT.
Inflation Report 2014-II
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Central Bank of the Republic of Turkey
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Inflation Report 2014-II