Government budget is the main indicator of the operations of government

revenues and expenditures.

The Gross Domestic Product in Turkey expanded 3.80 percent quarter-on-

quarter in the last three months of 2016, recovering from 2.1 percent contraction in
the previous period. Turkey recorded a government debt equivalent to 28.30
percent of the country's GDP in 2016. Turkey's trade deficit slightly decreased to
$4.5 billion in March of 2017, compared to a $5 billion gap a year earlier as exports
rose more than imports. Exports increased by 13.6 percent to $14.5 billion, mainly
driven by mining and quarrying, and manufacturing. Imports rose 6.9 percent to
$19.0 billion, led by mining and quarrying and manufacturing. Government Debt in
Turkey increased to 725419 TRY Million ($203.117,32 million) in October from
713189 TRY Million ($199.692,92 million) in September of 2016. Turkey recorded
29.3 billion TRY ($7.81 billion) budget deficit equal to 1 percent of the country's GDP
in 2015.
Budgetary institutions: The Republic of Turkey is a unitary republic which
has a presidential system of government. The authority to legislate lies with the
Grand National Assembly (parliament) which uses this authority in the name of the
nation.
The authority to spend money is delegated by the parliament to the cabinet
through annual budget laws. The draft budget is presented by the cabinet and
enacted by the parliament. Parliamentary oversight of public expenditures is carried
out by the High Court of Accounts (HCA), which presents its audit (Statement of
Conformity) to the parliament following the end of the fiscal year. Concurrently, the
cabinet presents its Final Accounts Bill.
Central control agencies are the Ministry of Finance (MOF), the Treasury, the
State Planning Organization (SPO), the State Personnel Office, and the Central Bank
(CB). The MOF contains the general directorate for budget and fiscal control
(expenditures), the general directorate for revenues (taxes), the general directorate
for accounting, the property office and the state supply office. It has primary
responsibility for the preparation and the implementation of the budget. Cash and
debt management are under the responsibility of the Treasury. The SPO is
responsible for authorizing public investment projects. Hence, it has an important
role in the preparation of the investment component of the budget. The annual
programs provide some key variables (inflation and exchange rate targets) which
are used by the rest of the actors in preparing the budget. A fourth important actor
is the CB. Even though the CB does not take a direct role in the budget process, it is
a key player both because CB advances are potentially an important source of
finance, and also because of the impact of monetary and exchange rate policy on
markets for government securities. Finally, the State Personnel Office is responsible
for recruitment and salary policy. In addition to ministry departments or "general
budget agencies", there are annex-budget agencies, state economic enterprises,
and agency types funded by extra-budgetary funds and revolving funds.
 Budget formulation process: The budget formulation process applies to
the ministries and the special budget agencies. Regulatory and supervisory
agencies follow a different procedure and submit their budget proposals directly to
parliament1. Within the MOF, the General Directorate of Budget and Fiscal Control
bears the main responsibility for the co-ordination of budget formulation.
The budget formulation process starts in May when the SPO prepares and
presents the three-year Medium-Term Programme (MTP) 2 to the Council of Ministers.
The MTP includes a macroeconomic forecast containing general government
revenue estimates and main priorities and objectives presented in short bullets. The
objectives include an inflation target for the medium term. The programme also
presents estimates for general government expenditures, revenues and borrowing
for the next three years. After the Council of Ministers has adopted the MTP, the
MOF prepares the Medium-Term Fiscal Plan (MTFP), covering the same years as the
MTP. The MTFP divides overall expenditure over separate ministries and special
budget agencies for the perid of the plan. The expenditure targets are based on the
medium-term inflation target of the MTP. The targets can be adjusted from year to
year in the light of recent macroeconomic developments and political priorities. This
provides a certain flexibility to accommodate unexpected macroeconomic
developments. The targets are not formally binding but rather serve as the first bid
of the MOF in the budget process. They can still be changed in the subsequent
negotiations between the MOF and the ministries or agencies. In early June, the
MTFP is presented to the High Planning Council (HPC) for adoption in mid-June.
At the end of June, the MOF prepares and sends out the Budget Call and the
Budget Preparation Guide, and the SPO prepares and sends out the Investment
Circular and the Investment Preparation Guide. Within the framework of these
guidelines, line ministries and agencies prepare their budget proposals. The
proposals are submitted to the MOF3 and the SPO before the end of July. Revenue
estimates for ministries4 are made by the MOF. Special budget agencies prepare and
submit their own revenue estimates to the MOF. After receiving the budget
requests5, the evaluation and negotiation phase starts. This process takes place in
August (evaluation) and September (negotiations). In this phase, meetings are held
between line ministries or special budget agencies and the MOF/SPO with the
purpose of harmonising proposals within the constraints of the overall targets for
the central government. Negotiations take place at various hierarchical levels but

1 with a copy to the MOF to be included in the central government budget law

2 the upcoming budget year and two out-years

3 except investments

4 including tax estimates

5 By General Directorate of Budget and Fiscal Control of the MOF and the SPO
rarely reach the level of ministers. At the end of September, the MOF and the SPO
finalize their respective budget proposals. The MOF then compiles the documents
and prepares the draft annual budget law. This document, together with the final
macroeconomic forecast of the SPO, is then presented to the HPC in the first week
of October. The HPC discusses the bill, resolves final problems and submits it to the
COM. The COM submits the budget bill with accompanying documentation to the
Turkish Grand National Assembly no later than 75 days before the start of the new
budget year, i.e. in mid October, as stated in Article 162 of the Constitution.

Analysis of the budget: Government Spending in Turkey increased to

4.081.536,20 TRY ($1.142.830,136) in the second quarter of 2016 from
3.572.626,80 TRY ($1.000.335,504) in the first quarter of 2016. As indicated on the
pie chart, major parts of the budget are allocated to MOF, Ministry of Education and
Treasuries.

The total share of security and defense spending will be 3.1 percent of the
national income over this year, with the inclusion of all spending by related units,
such as the Defense Ministry, the Justice Ministry, the Interior Ministry, police forces
and the National Intelligence Organization (MT).The education budget has also
been increased. This figure rose to 4.61 percent in 2016. The Health Ministrys budget
is 4.2 billion liras ($1.44 billion) Up to 1.25 percent of the national income will be
allocated for health expenses in 2016.

The budget amount of Turkey was experienced 570 milyar 876 milyon TL. Main
part of budget revenues of Turkey in 2016 consisted of taxes which was 403 billion
TL. Other dominant revenues sources were money penaults ( 8,7 milyar TL), state-
owned enterprises and state banks revenues