Low tax revenues and economic stimulus weigh on budget due to pandemic effect

According to the April budget data announced by the Ministry of Treasury and Finance; Budget balance, which had a deficit of 43.7 billion TRY in March 2020, had a deficit of 43.2 billion TRY in April 2020.

According to the April budget data announced by the Ministry of Treasury and Finance; Budget balance, which had a deficit of 43.7 billion TRY in March 2020, had a deficit of 43.2 billion TRY in April 2020. The budget had a deficit of 18.3 billion TRY in the same period of the previous year. As stated in the Monthly Budget Realizations Report, the primary deficit, which was 13.2 billion TRY in April 2019, was 26.2 billion TRY primary deficit in April 2020. Budget revenues increased by 13.1% between April 2019 and April 2020, to TRY 47.4 billion, while budget expenditures increased by 42.7% to TRY 108.4 billion in the same period. In the same period, tax revenues increased by 0.7% to TRY 49.1 billion, with a limited increase in the scope of measures against the weakening of domestic demand due to the epidemic and the economic effects of the epidemic. Non-interest budget expenditures were realized as 91.4 billion TRY with an increase of 28.9%.

 

When we look at the cumulative data of 2020; It was observed that the budget deficit was 72.8 billion TRY in January-April period. It is seen that the budget, which had a deficit of 54.5 billion TRY in the 4 months of the previous year, displayed a more negative outlook compared to the previous year. While 16 billion TRY primary deficit was given in January - April 2019, 17.5 billion TRY primary deficit was realized this year. Budget revenues increased by 16.3% between January - April 2019 and January - April 2020, reaching 321 billion TRY, while budget expenditures increased by 19.2% in the same period and reached 393.8 billion TRY. In the same period, the increase in tax revenues was realized as 10.9% and reached TRY 225.2 billion. Non-interest budget expenditures amounted to 338.5 billion TRY, increasing by 15.9%.

 

The strong course of tax revenues along with the economic activity, which remained strong in the first 2 months of the year, declined sharply in March and April with the negative impact of the epidemic on the economy. Within the scope of the stimulus given to the economy in this period, we expect the tax delays to be effective in the weak course of tax collections. Since some of the decrease in consumption will come back with the effect of the normalization steps after May, there may be a positive effect here. Foreign trade, on the other hand, will remain weak due to the global slowdown. We expect that the increasing budget expenditures as part of the stimulus given to the economy will have an effect on increasing the budget deficit during the period in which the aftershocks of pandemic will continue to be felt. In the future, recovery in domestic demand items in the economy and recovery in tax revenues after normalization will be important in terms of budget performance.

Source: Tera Menkul
Hibya News Agency
 

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