Turkey’s Ministry of Treasure and Finance revealed the statistics on the budget for July. The early comments on the statistics focus on the budget surplus in July.
The Anadolu Agency (AA), a pro-government agency which is also the state’s official news agency, covered only the numbers given by the Ministry, depicting the apparent surplus as a recovery. However, Kadir Sev, a former commissioner of audits and soL columnist, points out in our interview that this is only true for the surface and when it is scratched, the reality does not correspond to what is claimed by the AA and other pro-government agencies.
The interview is as follows…
First, this issue of “surplus”. Is it really a surplus?
No, it is not. To begin with, there was a larger deficit than was expected while the budget for the first seven months of 2019 had been prepared. To put it simply, an 80,6-billion-lira [$14,5 billion] deficit was expected for the whole of 2019, but the deficit has already reached 69 billion lira [$12,3 billion]. Moreover, this calculation does not involve the 40 billion lira [$7,2 billion] transferred from the Central Bank [of the Turkish Republic]! This means that the central government’s expenditures exceeded its incomes by 110 billion lira [$19,5 billion], which is 30 billion lira [$5,3 billion] more than what was expected.
But can’t the surplus in July be an indication of an upturn?
We can’t see this as an indication of recovery. For one, this is not based on a structural ground. I mean, it can’t be said that “this and this improvements were made, so the recovery will continue.” Contrary, this recovery has “extraordinary” reasons. The reserve fund of the Central Bank was transferred to the budget in July; also, with the termination of the time prescribed for the VAT and the Special Consumption Tax [SCT] reductions, there was an increase in the tax incomes. This way, a surplus around 10 billion lira [$1,7 billion] was made.
The largest expense item after the staff costs is the debit interest costs. This is probably one of the unchanging realities of the budget?
Definitely. It’s 58,5 billion lira [$10,5 billion]. The part of it paid for the internal debts is 42,2 billion lira [$7,5 billion]. The state bond and the treasury bill… Exchange-rate-indexed external debt is 14,2 billion lira [$2,5 billion].
What else do you consider important related to the budget realisations of the central government?
First of all, the “secret service expenditures” used by the President and can never be called for an account. The amount of expenditure between January and July exceeded 1,3 billion lira [$232,6 million]. It draws attention that 406 million lira [$72,7 million] was spent only in April for this item. It relatively decreased in the following months – 214 million lira [$38,3 million] in June and 126 million lira [$22,5 million] in July. Let’s put a marker here.
Another attention-grabbing point is that the amount spent for the security and defence services condensed in May and July. A total of 4,4 billion lira [$787,5 million] was spent between January and July. 1,2 billion [$215 million] of it was spent in May and 1,4 billion [$250,5 million] in July, which means that half of the amount for the whole of the 7-month period was spent only in two months.
Another expense item I would like to point out is about the “expropriation costs”. To sum up, 500 million lira [$89,5 million] was spent on the expropriations for public buildings. While the state sells off its plots (dirt cheap, as we know), it purchases other plots to make public buildings on.