ANKARA-TEPAV asked for the clarification of some points regarding the source of the improvements in 2009 budget. TEPAV report said "Clarification of the level of stock liability that was not included in 2009 budget expenditures and was transferred to 2010 is of great importance in terms of fiscal transparency" and asked for more detailed information on the causes of the 45% rise in VAT collections as well as the 50% rise in premium revenue collections which occurred despite the fall in formal employment. 

Fiscal Monitoring Report - 2009 December Budget Results TEPAV prepared by Stability Institute TEPAV was published. The report also included a section titled "Declaration of Conformity for Final Account and Arbitrary Exercise of Authority by the Public Authority - Can the TGNA Control How the Budget Right is Used?" 

The report on the basis of the temporary data indicated that central government budget had 52.2 billion TL of deficit with revenue of 215.1 billion TL and expenditures of 267.3 billion TL and underlined that budget deficit elevated by 200% compared to the year before. 

The report emphasized that the 2009 budget deficit was revised first from 10.3 billion to 48.3 billion TL and then to 62.2 billion TL in the revised estimations and added: 

"Initial estimations on the budget deficit indicate that the classical principles of the budget, namely realism and truthfulness are disregarded. The fact that the actual result stands significantly below the latest estimations by the public authority implies that the situation is not justifiable or excusable." 

Budget deficit can be shown to be much lower than it actually is...

TEPAV's Report stated that the jump in health expenditures in the last quarter of 2009, and particularly in December accompanied by the fall in the transfers to SSI (Social Security Institution) put forth the possibility that the liabilities in this realm will not be realized as expenditures but will be deferred. The Report continued: "This implies that the transfers to the SSI will increase excessively at the beginning of 2010. In this respect, clarification of the level of stock liability that was not included in 2009 budget expenditures and was transferred to 2010 is of great importance in terms of fiscal transparency as budget deficit in one particular year can be shown much lower than it actually is through such expenditure layoffs." 

Astonishing developments...

TEPAV Report also attracted attention to some developments in budget items: 

One among these was the SSI premium revenues. The budget showed that in 2009 the number of registered formal employees fell by 3.1% as of the end of December. However, despite a reduction in formal employment, premium collections of SSI increased by around 50% compared to the same period in the last year. 

Another surprising development was related with tax collections. The budget said that tax collections increased by 19.8% in November and December; 2% for income tax, 29% for corporation tax; 45% for domestic VAT; 25% for VAT on imports, and 19.2% for SCT. The report claimed that though the rises in collections can partially be explained with the recent relative recovery in the economy, changes in the tax amounts and rates, and with the low basis effect as compared with the same period last year; it is hard to explain the 45% rise in domestic VAT collection through the economic revival enjoyed over the last couple of months. The Report maintained "It would be useful if the taxation authority provides more detailed information in this regard to the public." 

Where did the unemployment insurance fund go?

Another point the Report focused on was about the funds allocated from the Privatization Fund and Unemployment Insurance Fund. The Report stated that capital expenditures, which did not deviate much from the initial allowance in 2006 and 2007, rose by 15.7% compared to the initial allowance in 2008 due to the resources transferred from Privatization Fund and Unemployment Insurance Fund and due to the rise in GAP (Southeastern Anatolia Project) and highways investments and indicated that the capital expenditures realization rate compared to the budget was 133.8%. The report continued: 

"It appears that the capital expenditures remain to be made particularly for state highways. Here, two questions rise with respect to the efficiency of investment expenditures: 

First is related with which amount and ratio of the funds transferred from Privatization Fund and Unemployment Insurance Fund were allocated for GAP investments and with the difference between the planned and realized expenditures. The second point relates with the proportion of investment expenditures allocated for new investments and allocated for the maintenance of already made investments; particularly for the state highways case." 

The government passes beyond the authority defined by the TGNA

TEPAV Report stressed that over the last years, the government passed beyond the expenditure authority defined by the TGNA again through the articles on allowance transfers recently added to the Budget Law and that the year-end figures prove that the initially defined expenditure authority was exceeded. 

The Report revealed that in 2008 the defined amount was exceeded as high as 5 billion TL driven mainly by the expenditures under personnel item and said: "Upon high reductions in personnel expenditures, these amounts are transferred first to auxiliary allowances and then to relevant budget items. Then, under the items to which resource were transferred expenditures above the amount initially granted by the TGNA is made throughout the year. Under the personnel item, expenditures can be made independent of the allowance. This way, personnel expenditures exceeding the allowance level, as noticed at the end of the year at final account negotiations, is legalized by the TGNA upon the suggestion of the Court of Accounts through the granting of complementary allowance." 

The Report underlined that though such a practice seems to solve the problem on paper, it forms the basis for government expenditures exceeding the budget right initially transferred by the TGNA at the beginning of the year. The Report states that such practices which are seen to gain prevalence day by day should be prohibited notwithstanding exceptions. The Report said that the fact that the items which receive the transferred allowances are not reported is another point to address.