Starting this week, the eyes of the markets will be on the New Economic Program (NEP), regarded as a road map for the economy, and the central government budget for 2020. Expected to be announced this week by Treasury and Finance Minister Berat Albayrak, the NEP will outline a comprehensive set of policies to address crucial macro indicators for the period 2020-2022 such as inflation, employment, growth, exports and the current account deficit. It has been a year since the announcement of the first New Economic Program, which came after Turkish citizens voted to switch Turkey from a parliamentary system to an executive presidential system of governance in April 2017 and the government took office in early June.
The program had outlined broad guidelines for the economic rebalancing period.
Prepared in line with the requirements of general economic conditions, the plan will include macro policies, principles and targets as well as basic economic variables. The program, which will also increase predictability for the private sector, will contribute to the confidence and stability by maintaining social and economic developments ensured in recent years on a more solid basis.
Along with the NEP, the process regarding the central government budget for 2020 will be brought to a certain point. The objectives and priorities of the program will be taken as a basis in the preparation of the budgets of the ministries and institutions. In line with the NEP, the Medium-Term Fiscal Plan, which includes the total income and expense estimates, deficit target and borrowing status and appropriation proposal ceilings of public administrations for the next three years, will also be published in the Official Gazette.
After the program and the financial plan are published, the budget call and the investment circular will also be announced in the Official Gazette to direct the budget proposals of the public administrations and the process of preparing the investment program.
Meanwhile, the central government budget law proposal is expected to be submitted to Parliament by Oct. 17.
The second budget of the presidential governance system will be put into effect as of Jan. 1 after negotiations to be held at the commissions and the General Assembly in the Turkish Grand National Assembly (TBMM). The investment program for the coming year will also be announced in the first month of 2020.
On the other hand, preparations are underway for monitoring the effectiveness of the use of public resources and for the transition to the program budgeting system for transparency and accountability.
The first step in the transition to the program budget system will be taken with the preparation of 2020 performance programs. The program-based system will be implemented with the 2021 budget.
While October will cover the NEP and budget agenda, several important economic data will also be announced during the month. For instance, September export figures will be announced by the Trade Minister Ruhsar Pekcan in the Mediterranean coastal province Mersin on Wednesday. The same day, all eyes will also be on inflation figures. Unemployment figures and September budget realization results will be announced on Oct. 15.
Following inflation data, focus will turn to the Monetary Policy Committee (MPC) meeting of the Central Bank of Republic of Turkey (CBRT), which cut its key interest rates in the last two meetings. The MPC will gather on Oct. 24 and announce the interest rate decision. CBRT Governor Murat Uysal will also outline the last inflation report of the year on Oct. 31.
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