According to the February budget data announced by the Ministry of Treasury and Finance; The central government budget, which had a deficit of 30 billion TRY in January 2022, gave a surplus of 69.7 billion lira (4.71 billion dollars) in February 2022. The budget had a surplus of 23.2 billion TRY in the same period of last year. As stated in the Monthly Budget Realizations Report, primary surplus of 35.9 billion TRY in February 2021 became 113.4 billion TRY in February 2022. Revenues increased by 126% to TRY 270.6 billion between February 2021 and February 2022, with the reflection of the CBRT corporate profit on the Treasury accounts, and increased in real terms when adjusted for 54.4% consumer inflation. Tax revenue increased by 83.2% to 180.3 billion liras in February, compared to 98.4 billion liras a year ago. In this period, it was observed that high rates of increase in some tax items continued with the reflection of tax adjustments, increase in exchange rates and increase in prices. Non-interest expenditures increased by 87.9% annually and reached 157.1 billion liras. Interest expenditures, on the other hand, increased by 242.3% and reached 43.7 billion liras.
When we look at the 2022 cumulative data; In the January-February period, it was observed that the budget gave a surplus of 99.8 billion TRY. It is seen that the budget, which had a deficit of 984 million TRY in the 2-month period of the previous year, displayed a more positive outlook compared to the previous year. While there was a primary surplus of 33.7 billion TRY in January – February 2021, a primary surplus of 157.7 billion TRY was realized this year. Budget revenues increased by 113.5% between January - February 2021 and January - February 2022 to 446.6 billion TRY, while budget expenditures increased by 65% to 346.8 billion TRY in the same period. In the same period, the increase in tax revenues was realized as 84.5% and became 327.7 billion TRY. Non-interest budget expenditures, on the other hand, increased by 64.6% and amounted to TRY 288.9 billion.
The Treasury gave a cash budget surplus of 55.5 billion liras in February. The central government budget ran a surplus for the second month in a row in February with the support of the dividend payment from the Central Bank. The central bank distributed 49.3 billion liras from its profits and reserves to the government last month. The one-time effects of the profit from the CBRT and the increase in tax revenues at the beginning of the year seem to have been decisive in the February budget realization. On the income side, we will continue to observe the determinant effect of taxes on domestic consumption. Particularly, due to the inflationary environment, factors such as both the reductions in VAT on consumption in order to protect purchasing power and the decrease in private consumption will have the effect of subsidies and decreased expenditures on VAT and SCT. Therefore, it can be expected that the net contribution of tax revenues to the budget performance in the rest of the year will decrease.
The interest burden on Treasury borrowings may also remain high due to the CPI. In this period, we can also observe the effect of increase in the general expenses of the government, especially in the purchase of goods and services, and in the cost and inflation effects of the amount transferred to SEEs. In the public sector, the savings and expenditure effects within the scope of personnel, building, and vehicle expenses should also be monitored for financial discipline in expenditures. Another important expense item will be based on the funding of the FX-linked deposit product. The exchange rate, which indicates a periodic return of 9.5% in the period after 20 December, means that the joint undertaking of the Treasury and the CBRT is 5.5% on a periodic basis in a 3-month term. The calculation we made over the 3-month average exchange rate in the 539 billion TRY FX-linked deposit indicates that the Treasury / Central Bank difference of 29.6 billion TRY (approximately 2 billion dollars) will be paid to the end of the period balance. Although no breakdown is given in the BRSA data, we estimate that approximately 55% of the amount in FX-linked product is on the Treasury product.
Kaynak: Tera Yatırım
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