According to the May budget data announced by the Ministry of Treasury and Finance; The budget balance, which had a deficit of 16.9 billion TRY in April 2021, had a deficit of 13.4 billion TRY in May 2021. The budget had a deficit of 17.3 billion TRY in the same period of last year. As stated in the Monthly Budget Realizations Report, the primary deficit, which was TRY 7.6 billion in May 2020, became TRY 575 million surplus in May 2021. Budget revenues increased by 53.5% to 104.6 billion TRY between May 2020 and May 2021, while budget expenditures increased by 38% to 117.9 billion TRY in the same period. In the same period, tax revenues increased by 66.9% and reached TRY 92.3 billion. Despite the government’s quarantine application last month due to the increase in Covid-19 cases, the economic activity that has been strengthening since the beginning of the year has been effective in the crest of tax revenues. Non-interest budget expenditures, on the other hand, increased by 37.2% and amounted to TRY 104 billion. Interest payments expenditures increased by 44.3% to TRY 13.9 billion in the same period. Borrowing costs remained higher compared to the previous year due to high inflation.
When we look at the cumulative data of 2021; In the January – May period, it was observed that the budget had a deficit of 7.5 billion TRY. It is seen that the budget, which had a deficit of 90.1 billion TRY in the 5-month period of the previous year, displayed a more positive outlook. While a primary deficit of 25.1 billion TRY was recorded in January – May 2020, a primary surplus of 73.9 billion TRY was realized this year. Budget revenues increased by 39.4% between January – May 2020 and January – May 2021 to 542.5 billion TRY, while budget expenditures increased by 14.8% to 550 billion TRY in the same period. In the same period, the increase in tax revenues was 51%, reaching TRY 423.7 billion. Non-interest budget expenditures, on the other hand, increased by 13.1% and amounted to TRY 468.5 billion.
The high growth performance of the economy in the first two quarters has positive implications for budget revenues. Although the budget ran a deficit for two consecutive months in May, it is observed that it is not at the level of fiscal expansion last year thanks to higher tax collection. Last year, the budget deficit increased due to the economic supports that had to be put into use at a high rate to alleviate the effects of the pandemic, as well as the limited economic activity and the epidemic conditions affecting the income level. Especially the epidemic conditions had a negative impact on VAT and SCT revenues. Although there is an increase in the related items with the revival of demand in the economy, there is also a certain loss of tax revenue as the increase in gasoline prices is covered by SCT within the scope of the chart mobile system. On the other hand, it is observed that the collection of valuable housing tax, which has been postponed for one year in tax revenues, is also activated this year (first installment in March, second installment in August). Since the collection effect of the debt restructurings made last year is also activated, budget revenues are positively affected. Another factor that will positively affect tax revenues is that the corporate tax rate will be applied as 25% for 2021 and 23% for 2022.
In terms of Treasury financing, the improvement in the budget performance compared to the previous year is positive. Pandemic conditions are still valid and the demand to continue the supports given to the economy is repeated. Therefore, in terms of budget performance, we are still less likely to see the fiscal expansion effect, though less than before. However, vaccination is spreading, and when this epidemic breaks its effect, economic activity will be at better levels. The growth performance in the last two quarters is decisive, and upside and down risks still seem balanced. Interest rates are still high, so interest payments on foreign borrowings will continue to increase. The Treasury wants to give more weight to domestic borrowing in its current borrowing strategy in order to reduce its foreign currency borrowing.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı