Budget deficit increased 10-fold! 12Punto columnist Köyatası: Extravagance and election waste stand out

12Punto columnist Meriç Köyatası evaluated the budget deficit recorded in 2023:

The 2023 budget deficit was 1 trillion 375 billion TL. A year ago, it was 142 billion lira. There is an increase of nearly 10-fold compared to a year ago.

This is partly due to the earthquake disaster that occurred last year. But it is also evident that the government's reckless spending continues at full speed. Minister of Finance Mehmet Şimşek says that earthquake expenditures were 950 billion TL. And Mehmet Şimşek states that the ratio of expenditures made for the earthquake to the national income is 3.7 percent. This is a commendable ratio. Whether it goes to the right place, whether contractors are favored in tenders, and whether the expenditures are used efficiently is a separate issue. I do not have the data to evaluate this part of the matter. However, I must say this: If we exclude earthquake expenditures, the deficit would have been 425 billion lira. This still means a 3-fold increase compared to the previous year. Inflation did not increase three-fold for the budget deficit to increase 3-fold. According to TÜİK, inflation increased by 69 percent, and according to ENAG, by 127 percent.

WE PAID MORE INTEREST THAN APPEARS

They say the amount paid for interest in the budget is 674 billion TL. Paying this much interest even in a period when interest rates are below inflation is another indicator of the waste in the budget. Furthermore, the interest payment made last year is not actually 674 billion TL. Although payments made for Currency Protected Deposits (KKM) are called exchange rate differences rather than interest, they are in reality interest payments. The exchange rate difference (interest) payment made by the Treasury for KKM is 59 billion TL. If we add the two, the interest payment coming out of the Treasury is 733 billion lira. But in reality, if we add the loss of the Central Bank, the cost of the interest payment to the Turkish people is 1 trillion 727 billion lira.

The Central Bank, which made a profit of 41 billion lira in 2022, suffered a loss of 894 billion lira in 2023 due to KKM differences. If this loss had not occurred, this money would have been transferred to the Treasury as revenue this year, or it would have been kept in the Central Bank as a contingency reserve for bad days, for example, for the earthquake disaster we experienced. Although the interest payment seen in the budget is 674 billion TL, in reality, the interest burden on the Turkish people this year is 1 trillion 727 billion lira.

As a result, even if we set aside earthquake expenditures, it would not be misleading to say that the 2023 budget is a budget for winning elections on one hand, and for public extravagance and enriching cronies on the other.