The last positive indicator in the budget has also disappeared

For many years, the primary balance was one of the greatest safeguards of the central government budget and Turkish public financial management. In its simplest definition, the primary balance is a measure of whether the budget has a surplus or a deficit when interest payments are excluded. The ideal scenario is for the budget to run a surplus when interest expenditures are excluded. This allows the state to provide services to its citizens with a portion of its revenues while using another portion to pay the interest arising from its debts. The undesirable situation is running a primary deficit, meaning that public revenues are insufficient to cover even the basic expenditures excluding interest costs. In this case, the state is forced to borrow again both to provide services to its citizens and to pay interest, which in turn causes interest expenses to rise even further.

Although there has been a chronic budget deficit in our country, there was no serious weakness in public financial management because the debt stock was at a manageable level and a primary surplus was being maintained. Although the rising debt stock in recent years has not reached extreme levels, the increase in the debt stock has significantly increased our interest expenses.

After 2016, the primary surplus, which was one of the most important indicators of stability in the budget, began to lose its strength and has already signaled that it will post a record deficit by the end of 2023. The weakening that began in 2016 reached a record level in 2019 before starting to recover, and although it returned to a surplus in 2022, a significant increase in the primary deficit has occurred due to both the earthquake disaster in February 2023 and expenditures stemming from unplanned promises during the presidential election process.

According to budget realization data published by the Presidency of Strategy and Budget, while the budget had a primary surplus of 139 billion TL in October 2022, this figure turned into a 70 billion TL deficit in 2023. Similarly, while the cumulative primary surplus between January and October 2022 was 171 billion TL, this figure resulted in a 93 billion TL deficit between January and October 2023. No development that would positively affect the primary balance is expected in the remaining months of 2023, and the probability of the negative trend continuing is extremely high.

It no longer seems possible to maintain the primary surplus, which has been a lifesaver and an anchor for Turkish public financial management for many years. In the current situation, there is no planning or concrete measure to turn the primary balance into a positive, and thus, the last positive indicator of our budget is disappearing.