Increasing expenditures and tax revenues effect budget balance


According to the June budget data announced by the Ministry of Treasury and Finance; The budget balance, which had a deficit of 13.4 billion TRY in May 2021, had a 25 billion TRY (2.9 billion USD) deficit in June 2021. The budget had a deficit of 19.4 billion TRY in the same period of last year. As stated in the Monthly Budget Realizations Report, the primary deficit, which was TRY 13.1 billion in June 2020, became TRY 15.6 billion in June 2021. Budget revenues increased by 33.3% to TRY 88.3 billion between June 2020 and June 2021, while budget expenditures increased by 32.4% to TRY 113.4 billion, above the headline inflation rate of 17.5% in the same period. In the same period, tax revenues increased by 32.1% and amounted to TRY 73.2 billion. Economic activity also improved last month as the government ended the strict nationwide lockdown imposed throughout May following a spike in Covid-19 cases. At the same time, the returns of tax collections deferred due to the pandemic last year were also reflected as an increase in revenues. Non-interest budget expenditures, on the other hand, increased by 31% to TRY 104 billion due to the 38.2% increase in current transfers, including payments made to the social security system, and the increase in government expenditures for the purchase of goods and services. Interest payments expenditures increased by 49.5% to 9.4 billion TRY 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-June period, it was observed that the budget had a deficit of 32.5 billion TRY. It is seen that the budget, which had a deficit of 109.5 billion TRY in the 6-month period of the previous year, displayed a more positive outlook compared to the previous year. While 38.2 billion TRY primary deficit was recorded in January – June 2020, this year 58.3 billion TRY primary surplus was realized. Budget revenues increased by 38.5% between January – June 2020 and January – June 2021 to 630.8 billion TRY, while budget expenditures increased by 17.4% to 663.4 billion TRY in the same period. In the same period, the increase in tax revenues was 47.9%, reaching TRY 496.9 billion. Non-interest budget expenditures, on the other hand, increased by 16% and amounted to TRY 572.5 billion.


The budget gave a monthly deficit for the third time in a row in June; We continue to monitor the impact of the increase in expenditures and tax collection. In the similar period of last year, in addition to the increase in public expenditures due to the support provided by the government due to the Covid-19 pandemic, tax collections that were postponed due to force majeure also caused a decrease in revenues. Therefore, we observe the rebound effect from last year’s exponential figures. Domestic demand is still active despite tight financial conditions. This supports the increase in indirect tax revenues, and the SCT adjustments made during the year are also effective in this. On the other hand, we will see the effect of public expenditures less with the reduction of pandemic support. On the public expenditure side, we will also be observing the impact of the austerity measures. Tax collections will reflect the impact of increased mobility in the economy, increased tax rates and the return of deferred payments.

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