170 likes | 291 Views
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.
E N D
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
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)
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 • Centralisation and fragmentation • IMF Stand-by agreement as de facto fiscal rule • Detailed line item classification
Centralisation and fragmentation • Strong top-down steering • Two central budget authorities • Complicated planning process
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 • 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 • 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
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 • Combination of institutional, functional, financing and economic classifications • Around 34.500 line item appropriations
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 • 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
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