Extending economic stimulus to affect the budget deficit

According to the May budget data announced by the Ministry of Treasury and Finance; Budget balance, which had a deficit of 43.2 billion TRY in April 2020, had a deficit of 17.3 billion TRY in May 2020.

According to the May budget data announced by the Ministry of Treasury and Finance; Budget balance, which had a deficit of 43.2 billion TRY in April 2020, had a deficit of 17.3 billion TRY in May 2020. The budget had a deficit of 12.1 billion TRY in the same period of the previous year. As stated in the Monthly Budget Realizations Report, primary deficit, which was 4.1 billion TRY in May 2019, was 7.6 billion TRY primary deficit in May 2020. Budget revenues decreased by 4.8% between May 2019 and May 2020, and became 68.1 billion TRY, while budget expenditures increased by 2.2% in the same period and reached 85.4 billion TRY. In the same period, tax revenues decreased by 7.6% within the scope of measures against the weakening of domestic demand due to the economic effects of the epidemic, and reached TRY 55.3 billion. Non-interest budget expenditures have increased by 0.2% to 75.8 billion TRY.

 

When we look at the cumulative data of 2020; In the January-May period, it was observed that the budget had a deficit of 90.1 billion TRY. It is observed that the budget, which had a deficit of 66.5 billion TRY in the 5-month period of last year, displayed a more negative outlook compared to last year. While 20.1 billion TRY primary deficit was given in January - May 2019, 25.1 billion TRY primary deficit was realized this year. Budget revenues increased by 12% between January - May 2019 and January - May 2020, reaching TRY 389.1 billion, while budget expenditures increased by 15.7% to TRY 479.2 billion in the same period. In the same period, the increase in tax revenues was 6.7% and reached 280.5 billion TRY. Non-interest budget expenditures amounted to 414.3 billion TRY, increasing by 12.7%.

 

Due to the pandemic conditions, the decrease in domestic demand and the stagnation effect in the economy, as well as the economic stimulus applied to reduce negative effects, continue to put pressure on the budget. The decrease in domestic consumption due to the epidemic, the contraction caused by foreign demand in exports and the decrease in the activities of companies have had a decreasing effect on tax revenues in this period. For this reason, there is a period in which both revenues decrease and expenses increase within the scope of tax incentives applied and economic incentives applied to support the situation of companies. Despite the gradual normalization phase of the economy, the continued implementation of supports, particularly employment incentives, will cause budget expenditures to remain high.

Source: Tera Menkul
Hibya News Agency
 

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