Crisis recovery budget drafted without reference to IMF deal
Posted by meb at October 19th, 2009
The central administration budget for 2010, which focuses on overcoming the economic crisis, was submitted for Parliament’s approval on Saturday and includes no specific reference to a potential stand-by deal with the International Monetary Fund (IMF).
Disclosing the details of the new budget at a press conference on Saturday, Finance Minister Mehmet Şimşek said Turkey had prepared its budget while taking into consideration its own needs and the conditions arising from the economic crisis, underlining that talks with the IMF would “proceed on the premises set out in the budget.”
The size of the 2010 budget is TL 286.93 billion. It includes a 5.06 percent wage increase for civil servants, in two equal semiannual installments of 2.5 percent. With expected revenue of TL 236.8 billion, the deficit will be approximately TL 50 billion.
According to experts, Finance Ministry bureaucrats maintained caution while drafting the budget. The economic gloom in Turkey will persist next year, and the government will stick to its policy of fiscal discipline, they note.
The minister stated in his comments that the General Directorate for Budget and Finance remained committed to the primary target of leading Turkey out of the crisis while working on the budget.
“We will clench our teeth to maintain fiscal discipline,” he said, adding that the government is planning neither to introduce any new taxes nor abolish existing ones.
The draft budget states that public investments will amount to TL 22.3 billion, and energy will enjoy the lion’s share of total investment. The second most favored sector in terms of its share in investment will be transportation. The government is planning to allocate a total of TL 1.5 billion to these two areas.
The Finance Ministry used the policies and figures proposed in the middle-term financial plan as a basis while preparing the new budget. The directorate tasked with drafting the budget also took requests from all ministries and other state institutions into consideration when trying to balance revenue with expenditure.
Şimşek said officials estimated that gross domestic product (GDP) would be TL 1.03 trillion for the year ahead while crafting the budget. Their prediction for GDP growth was 3.5 percent. Ministry bureaucrats anticipate a consumer price index (CPI) of 5.3 percent, $108 billion worth of exports and $153 billion in imports. The minister described their predictions for these major macroeconomic indicators as “quite realistic.” The minister said the projected revenue was raised and expenditures lowered from what they were in the 2009 budget in an attempt to reduce the budget deficit.
In the revised budget for this year, expenditures are estimated to hit TL 266.75 billion and revenue TL 203.93 billion, which means a deficit of TL 62.82 billion. This is a large jump of TL 52.4 billion over the original expectation for the 2009 budget. Şimşek said TL 44.8 billion of this extra deficit stemmed from a sharp fall in revenue amid falling economic activity during the worst crisis since the Great Depression. Only TL 7.6 billion resulted from an increase in expenditures, he added. According to the draft budget, transfers to social security institutions will rise 7.3 percent over this year in 2010 and will reach TL 57.7 billion. The government will transfer TL 31.8 billion to the Social Security Institution (SGK) alone in terms of deficit financing.
The budget envisages allocating TL 8.4 billion to agriculture, and of this amount, TL 5.6 billion will be in subsidies.
The share of revenue coming from local administrations was raised by 17.6 percent to TL 19.1 billion. Including all transfers, the budget envisages allocating a total of TL 22.1 billion to local administrations next year.
According to the draft budget, TL 525 million will be spent on the Village Infrastructure Support Projects (KÖYDES). The allocation for the Scientific and Technological Research Council of Turkey (TÜBİTAK) saw an incremental rise to reach TL 625 million.
The minister vowed that the government would do everything necessary to protect low-income earners, with proper wage increases for civil servants, retirees and workers.
Like previous budgets, the 2010 budget allocates the largest share of funds to education, as the Education Ministry’s annual budget once again surpasses all others, including the projected amount for defense expenditures.
The Health Ministry’s budget was increased by 12 percent. A Health Ministry project that promotes primary health care and facilitates visits to family practitioners rather than state hospitals, currently being tried in several pilot districts, will be extended to cover all 81 provinces.
The state will exclude health expenditures from the main budget for the first time next year, with the exception of parliamentary deputies and their dependents, soldiers, indigents holding green cards and prisoners. Expenditures for treatment and drug expenses will be transferred to the SGK, and the state will allocate a certain amount of funding to the SGK every year. Next year health services for civil servants will also be handled by the SGK.
Scholarships for students will increase 13.8 percent, while the allocation for distributing free textbooks to students has been increased by 6.4 percent.
source: Today’s Zaman
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