Mid-term fiscal plan to focus on savings, infrastructure investments

DAILY SABAH
ISTANBUL
Published 05.10.2017 19:57
Updated 05.10.2017 19:58
Mid-term fiscal plan to focus on savings, infrastructure investments

The medium-term fiscal plan features Turkey's target of avoiding a double deficit stemming from the current account and budget deficits, while ensuring savings, boosting growth with investments and improving infrastructure

The decision of Turkey's High Planning Council (HPC) regarding the Medium-Term Fiscal Plan (MTFP) covering 2018 to 2020 was published Thursday in the Official Gazette.

The plan highlights the protection of economic stability, unleashing growth potential, keeping current deficit at a sustainable level, increasing domestic savings, contributing to the investment incentives, controlling public sector borrowing requirement, gradually reducing the primary expenditures, maximizing the efficiency of public spending and incomes by limiting their share in national income, and ensuring the acquisition of public incomes from healthy and continuous sources.

In the same period, the main aim is to institute a growth structure based on investments, exports and qualitative employment that does not lead to inflation and the current account deficit, and is mainly financed by domestic savings and foreign-direct investments. The implementation of policies and measures that will serve to increase the quality of growth and the quantity of employment will be the main priority in the said period.

During the plan period, structural reforms will continue to be used as a supporting tool for fiscal discipline. Also, existing expenditure programs will be reviewed, and activities and projects with no priorities will be terminated. The expenditures will be prioritized by support public infrastructure investments, which will support growth.

Expenditures will be prioritized particularly in public infrastructure investments that will support growth, in incentives, regional development, education, and research and development (R&D) support.

Public administrations will set their own institutional priorities in accordance with the multi-year budgeting approach and present budget proposals for 2018, 2019 and 2020, based on policy priorities, macroeconomic indicators and appropriation ceilings in the New Medium-Term Program (MTP) and the MTFP.

Development Minister Lütfi Elvan said investments in the public sector will be designed in a way that complements private sector investments with a holistic approach and put into action.

"Public investment priorities will be determined to support the innovative and productive investments of the private sector, and trade and priority will be given to investments in qualified infrastructure that improves business, production, investments and the living environment," he said.

Emphasizing that the main purpose of the government is to take the welfare and happiness of the citizens to a higher level, Elvan said in order to protect macroeconomic stability, increase production and raise the level of social welfare, it is necessary to increase the employment rate by accelerating the growth from 2018 to 2020, maintain the price stability by decreasing the inflation, increase domestic savings, decrease the current account deficit, strengthen the public financial balances and fiscal discipline, so that the protection of the macroeconomic and financial stability are the key priorities.

Deputy Prime Minister Mehmet Şimşek emphasized savings within the scope of the midterm fiscal plan.

Speaking during a live broadcast at the private Turkish private channel, NTV, Şimşek stressed that the government is planning a series of reforms in public revenues.

He said that the budget aims to decrease the current expenditures, meaning that normally the government allows the ministries expenditure increases in accordance with the deflator, but that the new budged does not grant that opportunity.

He further emphasized that the expenditures by public institutions will be limited and increase the quality of revenues, which is the focal point in the midterm economic plan.

The main objective of the economic policy within the scope of the New Medium-Term Program covering the periods from 2018 to 2020 announced last week by Deputy Prime Minister Şimşek will be to maintain macroeconomic stability, maintain fiscal discipline, improve current account balance, reduce inflation, accelerate growth, increase employment and improve income distribution.

FISCAL POLICY TO BE IN LINE WITH MONETARY POLICY OBJECTIVES

It was also reported that the fiscal policy will, with main objectives and priorities, correspond to monetary policy objectives and will be implemented in a manner that it protects economic stability, increases growth potential, keeps current account deficit sustainable, increases domestic savings and contributes to incentives of investments.

Moreover, the share of public expenditures and incomes in the national income will be limited and efficiency will be increased in the said three-year period. Public revenues will be obtained from healthy and continuous sources by increasing the share of tax revenues in public revenues.

Also, the public sector will keep the requirement of borrowing under control, while sustainability of the fiscal policy will be supervised and protection of the gains obtained in the public finance area will be also provided in the future.

The 2018-2020 central government budget, which will be prepared based on the MTFP, aims to allocate resources in line with determined policy priorities and use them effectively and reasonably.

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