Budgetary Governance in Practice: Turkey · Developments in budgetary governance After the financial crisis of 2001, Turkey modernised the legislation concerning the budget process.

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Budgetary Governance in Practice: Turkey

Economic context

After a strong performance in 2017, Turkey’s economic growth is projected to edge down

but to stay between 5% and 5.5 in 2018 and 2019. Consumer price inflation remains far

above the target and disinflation is projected to be slow.

Fiscal policy plans

The fiscal policy strategy, which covers the time frame of 2018-20, is to contribute to

maintaining economic stability, increasing growth potential, keeping current account

deficit at a sustainable level, increasing domestic savings and promoting investments. The

fiscal policy targets of public sector borrowing are 2.1% of GDP in 2018, 1.9% in 2019,

1.3% in 2020.

A: Fiscal Balance and Public Debt B: Fiscal Policy Plans

C: Public Investment

Source : OECD National Accounts Statistics (database).

Note : The graph is referring to general government fiscal balance

and general government gross debt as defined in the OECD

National Accounts Statistics.

Note : The graph is referring to Fiscal Policy Plans that are

implemented and/or officially announced as of November 2017

and as indicated by the country. Actual results in graph A may

differ as the Fiscal Policy Plans are prepared by the country

beforehand and as the Debt and Balance Plan reported by the

country are based on the country’s own definition; Data are

referring to general government.

Source: OECD National Accounts Statistics (database);

Eurostat Government finance statistics (database).

Source: 2018 OECD Fiscal Plans and Budgeting Framework

Survey.

Notes: The graph is referring to government investment as a

percentage of GDP and as a share of total government

expenditures; No public investment data for 2007, 2008 and 2016

available for Turkey.

0

2

4

6

8

10

12

2009 2011 2013 2015

%

TUR as of GDP OECD as of GDPTUR as of exp. OECD as of exp.

-40

-20

0

20

40

60

80

100

120

2007 2009 2011 2013 2015

% of GDP

TUR Debt OECD DebtTUR Bal. OECD Bal.

-5

0

5

10

15

20

25

30

35

2015 2016 2017 2018 2019 2020

% of GDP

TUR Debt Plan TUR Bal. Plan

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Developments in budgetary governance

After the financial crisis of 2001, Turkey modernised the legislation concerning the budget

process. The main change was the introduction of the Public Financial Management and

Control Law (PFMC), adopted by the Turkish parliament in December 2003. The PFMC

Law is being implemented step by step, covering public financial management and control

at all levels of government.

Turkey started to publish citizens’ version of the budget as of 2017 in order to enhance

budget transparency. In addition, the tables that are prepared in line with the IMF's GFS

manual that are sent to the IMF since 2008 have been extended to the national legislation

as of 2015. Therefore, together with the regulation entered into force in 2015, financial

statistics, that are prepared and published at the national level, have been harmonised with

international financial statistics.

Central Budget Authority

Republic of Turkey Ministry of Finance

Weblink: www.maliye.gov.tr

Legal Framework

Constitution (Basic Law) includes foundational principles for public financial management; the Public Financial Management and Control Law No.5018 and its corresponding Budget Preparation Manual further specify the comprehensive budgeting framework.

Budget coverage

The executive’s budget covers central government.

Budget cycle

Budget circular n/a

Pre-budget statement 15 September

Negotiations with line

ministries

June-October

Executive budget proposal 17 October

Parliamentary vote on budget By 31 December

Start of financial year 1 Jan.

In-year budget execution reports monthly

Mid-year implementation report End of July

End of financial year 31 Dec.

Year-end financial statement End of June

Audited financial report Mid Sep.

Parliamentary accounting 17 Oct.

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Turkey’s application of OECD budget principles “at a glance”

1. Fiscal policy

objectives

The Medium Term Programme - prepared by the Ministry of Development and the Medium Term Fiscal Plan –prepared by the MoF put in forth the fiscal policy objectives for the next three years.

2a. Strategic alignment The five-year Development Plan, the three-year Medium Term Programme and the three-year Medium Term Expenditure Programme determine the strategic plans and priorities of the government. CBA has a leadership role in promoting alignment between annual budgets and medium-term plans.

2b. MTEF The three-year Medium Term Programme (MTP) which includes macro policies, principles and economic figures as targets and indicators is approved by the Council of Ministers. The three-year Medium Term Expenditure Plan (deficit and borrowing positions targeted) is approved by the High Planning Committee. The ceilings are set at economic classification level.

3. Capital and

infrastructure

Five-year National Development Plan is the overall long-term strategic plan including infrastructure. Capital and current expenditure requests are submitted separately by line ministries and the budget requests funding incrementally each year until the project is completed.

4. Transparency and

accessibility

Budget data is available in downloadable form. Turkey started to publish citizens’ version of the budget as of 2017 in order to enhance budget transparency. All core budget reports are open data.

5a. Parliamentary engagement In the Budget and Plan Committee, any change in the budget is possible, however in plenary session the legislature has no right to increase expenditures or decrease revenues.

5b. Inclusive public / civic debate Citizens do not have a formal voice in budget deliberations. A participative approach to budgeting has not yet been integrated into the budget procedures.

6. Financial reporting and accounting

Financial statements are prepared on an accrual basis and the budget is prepared on cash and/or commitment basis.

7. Budget execution The single treasury fund is mandatory for all revenues and expenditures of central government except for special budget institutions, special accounts of the general budget institutions, extra budgetary funds and revolving funds.

8a. Performance budgeting Within the scope of the Public Financial Management Reform carried out in Turkey, performance-based budgeting system has been introduced in public administrations since 2006. In this context, annual performance plans are prepared by public administrations including performance objectives and indicators. Since 2012, work is ongoing to include the programme structure in the budget classification system in order to strengthen the link between government priorities, annual performance plans and budgets.

8b. Evaluation and VFM Line ministries are in charge of ex ante and ex post evaluation, while CBA and SAI are in charge of ex post evaluation.

9. Fiscal risk and long-term sustainability

Economic Co-ordination Board is responsible for identification and management of overall fiscal risks. Internal co-ordination of fiscal management is conducted by main councils/boards composed of ministers and high position level.

The long-term fiscal projections cover up to five years and every year it is revised.

10. Quality assurance and audit Turkish Court of Accounts is responsible for the year-end financial reporting including quality control over performance information and compliance control on public spending.

Note: Rows in bold represent notable international practice.