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Budgeting in Turkey. Dirk-Jan KRAAN OECD Secretariat. Subjects of presentation. General characteristics of public finance management Key features of the budget formulation process Budget documentation for Parliament . Growth in real GDP Per cent change on previous year.

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budgeting in turkey

Budgeting in Turkey

Dirk-Jan KRAAN

OECD Secretariat

subjects of presentation
Subjects of presentation
  • General characteristics of public finance management
  • Key features of the budget formulation process
  • Budget documentation for Parliament
central government expenditure and revenues per cent of gdp

50%

45%

40%

Primaryrevenue

Forecasts

35%

Centralgovernment

30%

Primaryexpenditure

Centralgovernment

25%

20%

Total expenditure

Centralgovernment

15%

10%

5%

0%

2002

2003

2004

2005

2006

2008

2007

2009

Central government expenditure and revenues (per cent of GDP)
net debt of public sector per cent of gdp

90

80

70

60

50

Forecasts

40

30

20

10

0

2002

2003

2004

2005

2006

2007

2008

2009

Net debt of public sector(per cent of GDP)
key features of budget formulation process
Key features of budget formulation process
  • Centralisation and fragmentation
  • IMF Stand-by agreement as de facto fiscal rule
  • Detailed line item classification
centralisation and fragmentation
Centralisation and fragmentation
  • Strong top-down steering
  • Two central budget authorities
  • Complicated planning process
from long term plans to the annual budget

Development Plan/Long-term strategy (SPO)

Sectoral and thematic plans,Regional development plans,Provincial development plans, etc.

Medium Term Programme (SPO)

Medium-Term Fiscal Plan (MoF)

Annual Programme (SPO)

Annual budget (MoF)

Annual Pblic Investment Programme (SPO)

From long term plans to the annual budget
recommendations
Recommendations
  • Replace targets by ceilingsduring budget formulation
  • Introduce request stage for line ministries and agencies
  • Streamline planning procedures
  • Reposition State Planning Organisation as central forecasting and policy analysis institution
the imf stand by agreement as de facto fiscal rule
The IMF stand-by agreement as de facto fiscal rule
  • Target: primary surplus of 6.5 per cent
  • Revenue windfalls can be used for debt redemption, tax relief and investment
  • Expenditure windfalls can be used for new spending
  • Stand-by agreement expires in 2008
recommendations1
Recommendations
  • Maintain medium term expenditure targetbased on 6.5 percent GDP primary surplus
  • Move in the longer run to medium term expendituretarget based on total budget balancebelow 3 per cent GDP
detailed line item budget
Detailed line item budget
  • Combination of institutional, functional, financing and economic classifications
  • Around 34.500 line item appropriations
recommendations2
Recommendations
  • Reduce the number of line items to 10-20 per line ministry
  • Use only institutional/programmatic classification for budget
  • Maintain the existing classification for thefinancial accounts
budget documentation for parliament
Budget documentation for Parliament
  • Multi-annual estimates disconnected frombudget line item estimates
  • Outcome estimates for current and previousyear disconnected from budget line item estimates
  • No “horizontal”explanation of budget estimatesand multi-annual estimates
  • No “vertical”explanation of budget estimates and multi-annual estimates
recommendations3
Recommendations
  • Put outcomes of current and previous year as well es budget estimates and multi-annual estimates on the same line:

b. Provide horizontal and vertical explanations for each line item