According to the January budget data announced by the Ministry of Treasury and Finance; The budget balance, which had a deficit of 40.7 billion TRY in December 2020, had a deficit of 24.2 billion TRY in January 2021. The budget had a surplus of TRY 21.5 billion in the same period last year. The Central Bank dividend payment, normally made after the annual board meeting in April, was made in January in 2019 and 2020. Since the Central Bank profit payment has not yet been made to the Treasury this year, a decrease effect is observed in revenues. As stated in the Monthly Budget Realizations Report, the primary surplus, which was 34.2 billion TRY in January 2020, became 2.2 billion TRY primary deficit in January 2021. While budget revenues decreased by 26.7% between January 2020 and January 2021, to 89.6 billion TRY, budget expenditures increased by 13% in the same period and reached 113.8 billion TRY. In the similar period, tax revenues increased by 17.5% and reached 79.2 billion TRY, slightly compensating for the effect of no profit transfer from the Central Bank. Budget expenditures excluding interest, on the other hand, increased by 4.4% to TRY 91.8 billion with the 21.3% increase in current transfers including payments made to the social security system.
We will continue to monitor the increase effect on budget expenditures due to the continuation of pandemic risks. In addition, with the effect of increasing the public sector borrowing requirement and higher interest rates to combat inflation, we may see similar upward pressure on the interest payments side. As a matter of fact, with the increase in interest rates so as to keep inflation under control in January, interest payments expenditures increased by 72.2% and reached 21.9 billion lira. The decline in budget revenues is due to the fact that the Central Bank profit transfer, which was made differently than usual in 2019 and 2020, was not made this year. The dividend payment of the Central Bank is normally made to the stakeholders after the board meeting in April. Unlike the last 2 years, the budget had a deficit in January, with the effect of a 26.7% decrease in income due to the absence of an early profit distribution. While fiscal discipline should form one leg of the fight against inflation in 2021, we will also monitor the impact of the necessity of continuing economic support on the budget due to the pandemic.
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