According to the August budget data announced by the Ministry of Treasury and Finance; The fiscal balance, which had a deficit of 45.8 billion TRY in July 2021, gave a surplus of 40.8 billion TRY (4.83 billion USD) in August 2021. The budget had a surplus of 28.2 billion TRY in the same period of last year. As stated in the Monthly Budget Realizations Report, the primary surplus, which was TRY 40.1 billion in August 2020, became TRY 54.5 billion in August 2021. Budget revenues increased by 35% to 146.5 billion TRY due to the 64.2% increase in corporate tax income between August 2020 and August 2021, while general public expenditures increased by 31.6%, well above the headline inflation of 19.25% in the same period to 105.7 billion TRY. In the same period, total tax revenues increased by 33.2% and amounted to TRY 131.1 billion. Non-interest expenditures, on the other hand, increased by 34.5% in the same period and reached 92 billion TRY. Interest payments increased by 14.8% in the same period to TRY 13.7 billion.
When we look at the cumulative data of 2021; It was observed that the budget had a deficit of 37.5 billion TRY in the January-August period. It is seen that the budget, which had a deficit of 110.9 billion TRY in the 8-month period of the previous year, displayed a more positive outlook compared to the previous year. While 19.3 billion TRY primary deficit was recorded in January – August 2020, 90.7 billion TRY primary surplus was realized this year. Budget revenues increased by 34.1% between January - August 2020 and January - August 2021 to 872.6 billion TRY, while budget expenditures increased by 19.5% to 910.1 billion TRY in the same period. In the same period, the increase in tax revenues was 39.7%, reaching TRY 712.8 billion. Non-interest budget expenditures, on the other hand, increased by 16.7% and amounted to TRY 782 billion.
The budget ended its four-month series of deficits in August and posted its largest monthly surplus in TRY since 2006, driven by higher tax collections. According to the Cash Realizations in August, the Treasury had a cash budget surplus of 64.3 billion TRY and a primary deficit of 76.8 billion TRY. According to the MTP, the last economic program announced by the government, it is estimated that the budget deficit will equal 3.5% of the gross domestic product in 2021. If we consider the current budget deficit/GDP ratio on an 8-month basis, there may be a certain decrease in the budget performance in the period from September to December. We expect that the balancing effect of tax revenues on public expenditures will decrease in this period. We may see an impact on indirect taxes within the scope of financial conditions and macroprudential measures in the following period, following the tax revenues that rise periodically with the collection effect, which may indicate a lower income performance.
At the same time, the role of increasing interest expenditures in the last year's budget balance stands at a very important point. In the economy, increasing inflation and the increasing interest burden due to tight monetary policy are effective in borrowing costs and maturity structure. This, in turn, has an increasing effect on interest payments compared to previous periods. In addition, the interest cost that will be seen in the future on borrowings due, as well as the risk cost in public sector borrowings, especially in foreign borrowings, may have an increasing effect on budget expenditures over interest expenditures. Therefore, we care about the interest expenditures part as much as the tax revenues-public expenditures balance in the budget balance. The Treasury aims to reduce foreign currency borrowing and extend maturities. In the last Eurobond issuance of the Treasury, the yield of the October 2028 maturity bond with a coupon rate of 6.125% to the investor was 5.70% and the increase amount was 750 million USD. The coupon rate and yield of the bond with a maturity date of September 2033 was 6.50%, and the issuance amount was 1.5 billion USD.
Although the government's year-end budget deficit/GDP target is 3.5%; Our expectation is that we can close this year with a 3.7% budget deficit/GDP ratio. In the MTP, a budget deficit/GDP ratio of 3.5% for 2022, 3.2% for 2023 and 2.9% for 2024, which is the end of the program period, is targeted.
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