Şimşek vows to reinstate fiscal discipline
ISTANBUL
The government will not allow permanent deteriorations in public finance indicators by bringing the budget deficit under control and reestablishing fiscal discipline, Treasury and Finance Mehmet Şimşek has said, adding that necessary measures are being taken to this end.
“We will support the Central Bank's fight against inflation by strengthening the coordination between monetary policy and fiscal policy. By taking steps to reduce the current account deficit, we will also lower the country's risk premium,” Şimşek wrote on Twitter on July 9.
Earthquake-related expenditures are expected to reach 761.7 billion Turkish Liras ($29.2 billion) or 3.1 percent of Türkiye’s national income, he also said
“We are healing the wounds of our citizens affected by the earthquake disaster. As part of those efforts, construction works have started on 179,000 houses in the earthquake-stricken region. We plan to deliver approximately 319,000 houses to the earthquake victims in about a year,” the minister added.
The National Solidarity Package, which is currently under discussion in parliament, aims to alleviate the additional costs caused by the earthquake on the budget, while those regulations will also help bring the current account deficit under control, Şimşek said.
Meanwhile, the government has submitted an additional budget draft worth 1.12 trillion liras to parliament.
The largest share of the additional budget went to the Disaster and Emergency Management Presidency (AFAD) with 483 billion liras, while the share of the Treasury and Finance Ministry is 279.8 billion liras.
The additional budget allocates 80.5 billion liras for interest expenditure and around 101 billion liras for goods and services expenditure. Some 484 billion liras and 67.4 billion liras were allocated for capital transfers and capital expenditure.
The Defense Ministry will receive 30.8 billion liras, according to the additional draft budget.
The draft also projects 1.15 billion trillion liras in tax collection, with income tax revenues seen at 203.2 billion liras and corporate tax revenues at 166.3 billion liras.
Some 32.6 billion liras will be collected from the motor vehicle tax and 309.9 billion liras from the value-added tax (VAT, according to the draft.
Last week, the VAT on good and services have been increased by 2 percentage points.
The VAT, which was hiked from 18 percent to 20 percent, applies to a wide range of goods, including white goods, furniture and electronic goods.
The VAT on other goods, such as detergents, soap, toilet paper and diapers, was increased from 8 percent to 10 percent.
The increase in the salaries of civil servants will cost the budget 177 billion, according to a report by the Treasury and Finance Ministry submitted to parliament’s budget commission. The government raised the minimum salary for civil servants to 22,000 liras.
Meanwhile, pensions will be hiked by 25 percent, according to the omnibus bill presented to parliament.