new economy program balance-discipline … · december judicial coup and july 15 coup attempt,...

REPUBLIC OF TURKEY

MINISTRY OF TREASURY AND FINANCE

NEW ECONOMY PROGRAM

BALANCE-DISCIPLINE-TRANSFORMATION

2019-2021

MEDIUM TERM PROGRAM

INDEX

1. BALANCE-DISCIPLINE-TRANSFORMATION

1.1. Current Political and Economic Outlook

1.2. Main Targets

2. INFLATION

3. PUBLIC FINANCE

4. CURRENT ACCOUNT DEFICIT

5. GROWTH AND EMPLOYMENT

6. BANKING SECTOR AND LOANS TO NON-FINANCIAL SECTOR

6.1. Current Situation

6.2. Policies and Measures

7. PROGRAMS AND PROJECTS

8. ANNEXES

1. BALANCE-DISCIPLINE-TRANSFORMATION 2019-2021

The main targets of this Program, which covers the years 2019-2021, are to reestablish the price

and financial stability in the short-run, to secure economic balancing and fiscal discipline, and to

achieve economic transformation for sustainable growth and equitable distribution in the

medium-run. This Program is comprised of a set of policies, which make no concessions to the

precepts of the market economy, can be monitored objectively through simple performance

indicators; and is realistic, transparent, and consistent.

1.1. Current Political and Economic Outlook

Political stability of the country has been reinforced and a well-functioning democracy has

been re-secured after four elections and a referendum since Gezi Events in 2013, 17-25

December Judicial Coup and July 15 Coup Attempt, which were the events that have had

repercussions on the Turkish economy.

Security policies were inevitably prioritized due to the geo-political risks originated from

Syria and escalated terrorist attacks, and the course of events in this period didn’t allow the

implementation of the envisaged structural transformation in the economy.

Security threats have been largely curbed within the last year, and a period of five-year

political stability has commenced thanks to the general elections held on June 24, 2018. With the

normalization of the conditions, the next five years provide an important window of opportunity

to achieve the economic targets. A quick and effective decision-making mechanism secured by

the new Presidential System of Government and a more coordinated economic management will

be the most important advantages of this period.

Deterioration in risk perception towards the developing countries and interest rate hikes by

the Federal Reserve have led to slowdown in international capital flows since the second quarter

of 2018. Country risk premium has increased and Turkish Lira has depreciated because of

Turkey’s external financing requirements and some external distortions to Turkish economy, as

well as, Turkish Lira.

Deterioration in pricing behavior led by speculative increases in the value of foreign

exchange rates has given rise to surge in inflation, and, accordingly, market interest rates; to

slowdown in consumption, investment expenditures and total economic growth, and to

contraction of firms’ capacity in access to both domestic and external financing in the wake of

these developments. Furthermore, it is observed that the banks have tightened credit conditions,

and the number of the firms experiencing problems in their cash flows has increased recently. On

the contrary, strong external demand, competitive level of the real exchange rate, and soaring

tourism revenues have contributed to a marked decline in current account deficit, have limited the

slowdown in total demand, and have supported a more moderate course of rebalancing.

The New Economy Program (NEP) is constructed on the pillars of resilient and robust

economy, low public and household debt, fiscal discipline, dynamic and entrepreneurial private

sector, export-oriented structure which is open to the world markets, accelerated political

decision-making thanks to the new Presidential System of Government, and strong human

capital.

1.2. Main Targets

1. Consumer inflation will be lowered to single-digits by the end of 2020 and to 6.0 percent by

the end of 2021 with well-coordinated tight monetary and fiscal policies.

2. Public Finance Transformation Office will be established under the Ministry of Treasury and

Finance in order to ensure efficient use of public sector resources, to reduce costs and

expenditures, and to enhance quality of revenues. Lasting improvements in public finance

will be generated with the Savings and Revenue Transformation Program which will be

prepared and monitored by this Office.

3. Central government budget deficit to Gross Domestic Product ratio will be below 2 percent

in the subsequent three years, and primary surplus of the central government budget to GDP

ratio will increase and reach to 1.3 percent in year 2021. If needed, the fiscal space generated

will be used to finance the production-based economic transformation.

4. Total savings and measures will amount to 75.9 billion TRY in the 2019 budget (at 1.7

percent of GDP). 59.9 billion TRY of which will come from savings in expenditures and

16.0 billion TRY of which will come from revenue-augmenting measures. Decomposition of

the savings in expenditures is as follows: 30.9 billion TRY in public investments, 13.7 billion

TRY in incentives, 10.1 billion TRY in social security, 2.5 billion TRY in goods and

services, 2.7 billion TRY in others.

5. The investment projects for which the tender process hasn’t been initiated, or the tender

process has been finalized but construction has not been started yet, will be suspended.

Among the ongoing projects, renewed and extended business plans will be generated for the

ones with proper financing conditions. The mega-infrastructure projects will be realized

through foreign direct investment and international financing.

6. Big Data Tax Analysis Center which gathers different data sources will be established to

register and to tax the informal economy, and to increase tax revenues through effective tax

collection.

7. Financial structure evaluation studies will be conducted to determine the current financial

position and asset quality of banks. As per the outcomes of these studies, steps will be taken

to strengthen the financial structure of the banking sector, if needed. Thus, a set of policies

will be implemented to ensure that the non-financial sector has access to the credit market at

affordable cost and that the existing loans can be restructured.

8. An economic transformation based on exports, tourism and domestic production of industrial

goods will be initiated in order to mitigate dependence on foreign savings permanently and

to reduce the current account deficit below 3 percent of GDP.

9. By implementing new projects and target country programs in tourism, travel revenues will

be increased to USD 42 billion in 2021 from USD 23 billion in 2017.

10. Economic policy-making institutions will be restructured; confidence in the institutions will

be boosted through competence and performance-oriented human resources management; an

administration approach of fast decision-making, leading the markets, and reducing

bureaucracy to facilitate doing business will be adopted; a new financial architecture which

relies on financial stability and financial security will be introduced.

11. Financial Services Board of Turkey will be established for regulation and supervision of the

financial services.

12. In order to support and sustain the macroeconomic targets in the NEP, projects and plans

aiming at generating qualified labor force and strong society will be implemented.

An NEP Action Plan, which is prepared by the relevant ministries and institutions under the

coordination of the Ministry of Treasury and Finance, encompassing cost/benefit analyses of

every NEP measure, implementation calendar, and performance criteria will be put into action

with the start of 2019. Intermediate steps taken under this Plan will be tracked on a quarterly

basis.

2. INFLATION

One of the main goals of the NEP is to reduce inflation permanently and to ensure price

stability.

Annual consumer price inflation has soared due to cost-driven pressures, supply-side

developments in food prices, and distorted pricing behavior; and was realized as 17.9 percent in

August 2018.

Owing to lagged repercussions of the cost-driven pressures, it is expected that consumer

prices will increase further in the short-run and will be realized as around 20.8 percent by end-

2018. In tandem with strengthening coordination between the monetary and fiscal policies and

additional measures introduced in the NEP, it is expected that the consumer inflation will fall

down to single-digit levels by end-2020 and to 6 percent by end-2021.

Policies and Measures:

The Central Bank of Turkey will continue to use all available policy tools in a determined and

independent manner in line with its main target of price stability.

The Ministry of Treasury and Finance will support the combat with inflation via tight fiscal

discipline.

In the areas subject to the administrative price guidance (except personnel), inflation targets of

the NEP will be taken into consideration instead of past inflation.

Financial Stability and Development Committee (FİKKO) will be established for financial

security and sustainability of stability.

An early warning system will be established for accurate forecasting of the agricultural supply

and yield.

Product Monitoring Mechanism will be established to closely monitor price fluctuations in

food products by employing big data and advanced analytical methods.

The cap of rent increases will be determined in line with consumer price index instead of

producer price index, which is more vulnerable to exchange rates and commodity prices.

In addition to the measures taken by the public sector to fight against inflation, the Collective

Inflation Reduction Program will be launched with the support from all of the stakeholders in

economy, as well as, the citizens.

3. PUBLIC FINANCE

Fiscal discipline will be the main pillar of the balancing process in the NEP. The Public

Finance Transformation Office is responsible for making the savings permanent through

structural changes. As a result, in the next three years the ratio of budget deficit to GDP is

targeted to be less than 2 percent, and the ratio of primary surplus to GDP is targeted to exceed 1

percent at the end of the period.

The program-defined central government budget balance to GDP ratio, which is expected

to be at 1 percent deficit in 2018, is targeted to turn to a 0.8 percent surplus by the end of the

program period. The ratio of central government primary balance to GDP will increase

throughout the program period and reach 1.3 percent in 2021.

The public sector borrowing requirement to GDP is expected to be 2.7 percent in 2018, and

it is projected to decrease to 1.6 percent in 2019 and to 1.5 percent at the end of the program

period. In addition, the program defined public sector balance to GDP, which is expected to be at

2.1 percent deficit in 2018, is targeted to be at 0.8 percent surplus at the end of the program

period.

General government deficit to GDP, which is estimated to be 2.4 percent in 2018, is

projected to decline to 1.6 percent at the end of the 3-year period.

The EU-defined general government debt stock to GDP ratio, which is expected to be 31.1

percent in 2018, is estimated to be 27.2 percent at the end of the 3-year period.


The main objectives of public finance are to decrease the expenses made on goods and

services, capital expenditures, primary investment, current transfers and interest expenditures

and to increase revenues.

All incentive mechanisms, especially the cash and tax incentives will be examined and

rendered complementary, simple and effective. The harmony of these incentives with

macroeconomic targets and budget will be ensured.

No permanent expenditure will be generated in response to one-off and conjuncture-sensitive

revenues.

Expenditures on official state cars, housing and social facilities which are not directly related

to public service provision will be limited.

The construction and leasing of the new administrative service buildings in the public sector

will not be allowed.

State Owned Enterprises (SOEs) will be restructured so as to ensure that their productivity is

increased and their burden on public finance is diminished.

Steps will be taken to make sure that revolving funds operate in an open, transparent and

accountable administrative and financial structure and in line with budget discipline.

Program-driven, performance-based budgeting will be adopted to monitor the effectiveness of

the use of public resources and to enhance transparency and accountability.

Ineffective tax exceptions, exemptions and allowances will be gradually removed in order to

expand the tax base and reinforce the tax equity, while the tax legislation will be simplified.

Tax, social security premium and other public receivables will not be restructured.

The establishment of Tax Data Analysis Center will help enhance tax collection efficiency and

reduce tax informality.

Voluntary compliance to tax will be increased by activating Taxpayer Services Center, by

online provision of all tax services through Interactive Tax Collection Center, and by the

maintenance of tax records of small-scale taxpayers electronically.

Tax regulations will be revised by updating the list of luxurious and/or import-intensive

products.

In order to generate economic benefit from the assets in the privatization portfolio, economic

value added based planning will be implemented by using new models.

By establishing real estate appraisal system, real estate inventory will be completed. Real

estate taxation system will be redesigned by ensuring that land registry fees and real estate

taxes are collected according to their market values.

Collection of realistic public shares from value increases and a fair sharing of those increases

which are generated by zoning plan revisions will be ensured.

In order to enhance effectiveness and financial productivity of public-private partnership

(PPP) practices, a new operational framework will be developed, and the integrity of

applications will be ensured.

Social security system will be redesigned in order to maintain financial sustainability and to

reduce the burden on public finance.

4. CURRENT ACCOUNT DEFICIT

Another important target of the NEP is to take necessary measures to reduce the current

account deficit to a sustainable level; thus, reducing vulnerabilities arising from foreign savings

requirements and supporting domestic production and employment.

As imports fared stronger than exports with relatively strong domestic demand and rising

crude oil and commodity prices, external trade balance is deteriorated, and current account deficit

increased in the first half of 2018. Nevertheless, exports and tourism revenues have increased

with the rapid rise in exchange rates in the second half of the year; hence, the current account

deficit has improved significantly. In order to ensure that this improvement becomes sustainable

and permanent, transformation programs and projects in exports and tourism will be

implemented. As a result, the current account deficit to GDP ratio is expected to fall to 3.3

percent in 2019, 2.7 percent in 2020 and 2.6 percent in 2021.


In order to reduce dependency on imports and to increase exports, technology and R&D

investments will be implemented with public-private partnership models, by taking into

account domestic production and best practices in the world.

In order to reduce the current account deficit; pharmaceutical, chemical, petrochemical,

energy, machinery/equipment and software sectors are identified as priority investment areas.

Industry and technology zones, with effective management models and hosting large-scale

domestic and foreign investment will be established to produce high-tech products.

Domestic production of 20 biotechnological drugs, which are not produced in our country

right now, will be encouraged; our competences in biotechnology will be increased.

Petrochemical clustering and Ceyhan Industrial zone will be implemented.

The share of domestic production in tools and technical equipment used in security services

will be increased.

Export Master Plan will be built with new market, new product, and new exporter target and

with a global value chain mindset.

The incentive scheme for exports will be restructured in order to make the scheme more

efficient and effective.

Electronic Export Platform will be established for exporters to closely monitor global trade

data.

In order to facilitate international trade, accelerate customs procedures, prevent smuggling and

limit the revenue loss stemming from smuggling, customs information systems will be

strengthened in an end-to-end perspective including big data analysis and advanced analytics

competencies.

Current free trade agreements will be reviewed, targets for reducing the current account deficit

will be set and tracked, new free trade agreements supporting macroeconomic targets will be

made.

Works to update the Customs Union with the European Union will be completed.

The visibility of and awareness for domestic products will be increased by encouraging the

consumption of domestic products.

Implementation of National Unity Project in Agriculture will help restructure food value chain

from production to end use, prioritizing food safety and international competition. In this

context, support will be given to the Wholesale Farmers Market Law.

In the framework of the Belt and Road Initiative, bilateral economic relations will be

improved with China.

Africa Market Strategy will be developed in a data-driven structure covering various areas,

such as examples of companies investing in Africa, human resource profiles of countries,

business environments, and sectoral information.

New cultural and tourism protection and development zones will be allocated.

Projects for the development of health tourism will be planned and implemented.

Tourism plans for the Far East market, including China, India, Japan and Korea, will be

implemented.

Tourism Master Plan will be designed to extend the tourism season and increase spending per

person.

The share of solar, wind, biomass, renewables and domestic coal resources will be increased

in electricity production. Localization of these energy technologies will be supported through

YEKA model.

Energy input costs will be reduced within the framework of the National Energy Efficiency

Action Plan.

Oil and natural gas resource explorations, especially in the seas, will be accelerated.

Mineral exploration and drilling works will be continued rapidly, and discovered reserves will

be added to the economy with new business models and financing mechanisms in

public/private partnership.

Minerals, especially boron, will be processed and transformed into high value added products

and will be supplied to international markets.

5. Growth and Employment

Turkish economy grew by 7.4 percent in 2017 and 6.2 percent in the first half of 2018.

Economic activity has slowed down starting from the second quarter of this year and demand

composition has become more balanced with increasing contribution of net external demand to

growth. Existing trends imply that demand-side inflationary pressures will disappear in the

second half of the year and that there will be a rapid recovery in the current account balance.

It is of vital importance to continue the economic balancing process in a measured way so

as to lower inflation and current account deficit to reasonable levels that does not contradict with

growth target put forward in the NEP. Accordingly, a framework is designed to limit macro-

financial risks and to lead the economy towards a sustainable growth path by keeping the

financing need at reasonable levels in a period when domestic and external financing

opportunities are limited.

Macroeconomic policy design for the upcoming period is based on a framework that

economic activity will be below potential in 2019 and 2020, while a stronger recovery period will

start in 2021. Turkish economy is estimated to grow by 3.8 percent, 2.3 percent, 3.5 percent and

5.0 percent, respectively in the following three years starting from 2018.

During the balancing period, which is seen as a prerequisite for long term strong growth

with cyclical and structural policy actions, unemployment rate is expected to increase to 12.1

percent at the end of 2019 and then decline to 10.8 percent in 2021, which can be referred as a

year of recovery after balancing.


For the promotion of registered employment, risk oriented audit activities based on data

analysis will be expanded, the directing and guiding audit activities will be increased primarily

in sectors that informality is common. In order to combat informal employment, cooperation

among related institutions will be improved, and through integrated and interoperable

technological infrastructure, audit systems will be enhanced.

Impact analyses of employment incentives will be conducted, and the incentives will be

reviewed and redesigned according to needs.

By promoting digital transformation, modern and new financing methods for innovative

projects such as Crowdfunding and ICO (Initial Coin Offering) as an alternative of IPO will be

popularized.

Needs and preferences of public institutions and employees will be harmonized. Employees

will be able to devote more time to their family and social life, courses and training programs

with flexible working models suitable to the service and by establishing work life balance.

Through flexible employment, public institutions will have a workforce with high work

satisfaction and efficiency.

Innovative school-industry collaboration models will be established to meet the needs of

industrial sector and digital transformation objectives.

Severance pay reform will be implemented in alignment with all stakeholders.

Implementation of half-work allowance will be improved.

Education and training curriculum will be updated in cooperation with the private sector to

create a workforce that meets the expectations of working life.

Youth will be provided with basic skills on software, algorithms and industrial design by

training programs which take into account their familiarity of and interest in technology. By

enhancing the level of education of youth and quality of the workforce, their productivity will

be enhanced, and they will not just be the consumers of new technologies.

Automatic enrollment of employees to private pension system through their employers will be

restructured to be more sustainable.

Necessary institutional and legal infrastructure to bring idle agricultural land to agricultural

production will be established.

Education and consulting services to SMEs on branding, institutionalization, increased

productivity, and access to international markets will be provided. Projects that will ensure

SMEs to develop innovative business models will be put into practice.

Units will be formed at the ministries for the coordination of permission/approval/licensing

processes of investors and development of improvement proposals with private sector views.

Sectoral investment road maps will be formed that will be a guide for investors and include

permission, approval and license processes regarding investment and management periods.

Active labor market programs will be used effectively for supporting individuals who get

social assistance but are able to work to make them productive and have a sustainable income.

6. Banking Sector and Loans to Non-Financial Sector

6.1. Current Situation

Capital adequacy ratio of the banking sector is 16.1 percent as of July 2018. This ratio is

well above the legal rate of 8 percent and target rate of 12 percent. Non-performing loan ratio of

the sector is at 3 percent and annualized return on equity is at 14.4 percent. Our banks do not

have foreign exchange open position.

Recent fluctuations in exchange rates and interest rates have put pressure on real sector

balance sheets. As of the first quarter of 2018, share of total non-financial sector debt to GDP

ratio is 69 percent and about half of it is in foreign currency. On the other hand, foreign exchange

open position of non-financial corporates is 216 billion US dollars as of June 2018, and short

term net foreign exchange position is a surplus of 4 billion US dollars. 51 percent of the non-

financial corporates’ foreign exchange liabilities are on the domestic banks’ balance sheets. An

important part of firms that have open foreign exchange open position in non-financial sector

consists of large-scale companies and exporting firms. Having significant foreign exchange

income for these firms provides a natural hedge against currency risk.

The effects of current economic developments, currency and interest rate fluctuations on

non-financial sector, and the spillovers of these impacts on banking sector asset quality and

financial structure are monitored closely. Maintaining this robust structure of the sector and

taking necessary measures to keep the gains of the country are the priorities in the NEP period.

6.2. Policies and Measures

Financial health evaluation studies will be conducted to assess financial structure and asset

quality of banks. As a result of these studies, if needed, a comprehensive set of policies will be

introduced in the light of global examples and Turkish experience; which will help banking

sector further strengthen and non-financial sector access to credit at affordable rates, while

creating room for loan restructuring.

Regulation on Restructuring of Debts to Financial Sector prepared by the BRSA was

published in the Official Gazette dated 15.08.2018. This regulation aims at restructuring the

outstanding loans of the non-financial corporates that have owed to financial institutions

operating in Turkey, so that the corporates continue to create value for the economy.

Development Bank of Turkey will be restructured with an expanded mandate to strengthen

capital markets and support development.

Real Estate Bank of Turkey will be restructured to direct the development of real estate

industry in line with the best practices.

To support exports, Eximbank’s equity will be further strengthened, and number of branches

will be increased. The bank will continue to support exporters, companies earning foreign

exchange, and contractors operating abroad by improving and diversifying cash credit, export

credit insurance, and guarantee facilities/products.

Necessary legal and technical infrastructure will be established to ensure financial stability and

provision of timely data flow to the public. With solid data flow, especially in the upcoming

period, efforts to set up a more effective risk management system in monitoring credit risk in

the financial system, liquidity risk and currency risk have started. In addition, creating local

markets and instruments will set the stage for effective and timely elimination of risks.

Financial architecture will be redesigned in a way conducive to effectively provide and

coordinate all of these.

7. Programs and Projects

In addition to the policies and measures mentioned in other parts, projects and programs

will be put into practice to support macroeconomic targets in the New Economy Program and

reach sustainable growth with qualified labor force and strong society targets. Projects and

programs put forward here aim to strengthen individual and social development in the long term

while serving the main objectives of the NEP. Through a sweeping transformation, starting from

the individual and spreading to the all segments and institutions of the society, a permanent

foundation will be laid in reaching macroeconomic targets. All segments of the society united on

the goal of reaching a qualified labor force and strong society will accelerate this transformation

process. In this context, some of the projects and programs to be implemented are:

FINANCIAL SYSTEM

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Alternative hedging instruments (foreign currency swaps,

interest swaps) to foreign exchange purchase methods, which are

dominantly used as hedging strategies, will be developed within

Borsa Istanbul.

✔ ✔

The long-term Bond Futures Contracts Market will become

functional. ✔ ✔

Derivative products based on short term reference interest rate

and structured products that enable trading of index volatility

will be developed. ✔ ✔

While a strong corporate financing company will be established

by merging public investment institutions to make foreign

currency issues, a strong purchasing capacity will be provided by

merging public portfolio management companies.

✔ ✔

In order to expand participation banking, necessary regulations

will be implemented for the new business model/window system. ✔ ✔

The securitization of assets in bank balance sheets will be

encouraged within the scope of financial deepening and financial

stability. ✔ ✔ ✔

Reference interest rates that can be used to protect the Turkish

Lira denominated assets against interest rate risk and pricing of

floating rate instruments will be developed.

✔

The Turkey Reinsurance Pool that covers unsecured risks will be

created countrywide. ✔ ✔

LABOR MARKET

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Talent measurement, replacement and norm staff studies will be

carried out for public sector employees and effective management of

public sector human resources will be ensured through reward and

performance systems.

In order to meet the demand for qualified labor force in the digital

economy, courses and programs will be organized to train the

workforce in new professions that arise according to the requirements

of the developing industry.

Processes related with occupational health and safety measures will be

rearranged initiating from the planning and design phase.

To provide the labor market participation of youth and women; target

group, sector and region oriented incentives will be developed for the

implementation of active labor market programs and ensuring the

employability of those people.

Distance education programs will be developed for the disabled to

acquire professions.

Profiles of youth who are neither in education nor in employment

will be identified and individual, family and society oriented holistic

mechanism will be developed to support their participation in the

labor force and employment.

JUSTICE

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The specialization of the judiciary in areas such as finance and

energy will be provided and occupational specialization will be

expanded.

Alternative methods such as mandatory mediation and dispute

settlement mechanism will be expanded.

Notary reform will be carried out and the tasks of notaries will be

extended in a way that covers uncontentious judicial affairs.

Execution and bankruptcy proceedings will be accelerated by

taking into consideration the sensitive balance between the

creditor and the debtor and in this context new enforcement

office model will be expanded.

The system of performance based monitoring and evaluation will

be established through executing studies such as the

determination of duration targets in the judiciary.

ENVIRONMENT AND URBANISM

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Renovation and transformation works will be carried out within the

scope of the Urban Regeneration practices by protecting the

identity of historical and traditional urban centers.

Zero Waste Project applications will be expanded.

The sensitivity of the products and services to the environment will

be determined by establishing a National Environmental Labeling

System.

Infrastructure of transition to smart cities will be prepared through

establishing Turkey's National Geographic Information System.

EDUCATION

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Training programs and profession based supply and demand balance will

be established based on integration as well as detailed analysis of

education and employment data of different institutions, the education

scheme will be revisited in accordance with the needs of labor markets,

employability will be increased, production-based approach will be

introduced in vocational training, resources allocated to education

system will be utilized more efficiently and effective training programs

will be designed.

✔ ✔ ✔

In order to ensure fairness in the education system, a school-centered

approach will be adopted in line with the purposes of reducing the

discrepancies concerning the financial resources, instructor

qualifications and supervisory competencies, amongst students, schools

and regions, school administration will be strengthened, a training

quality index will be generated, inexperienced instructors will be

supported and positive discrimination will be made for disadvantaged

schools.

✔ ✔ ✔

So as to support the contribution of increased educational resources,

number of teachers, and improved physical capacity to student

acquirement in the most efficient way, data based decision process

support systems will be reinforced through “Ministry of National

Education Management Information System” Project (MEYÖBİS) to

increase the management capacity and its efficiency.

✔ ✔ ✔

Through the effective use of e-learning system in learning, curriculum

arrangements will be conducted in accordance with the digitalization

strategy as well as effective use and personalized instruction plan

(virtual assistant) implementation strategy will be carried out.

✔ ✔ ✔

Measurement and evaluation capacity will be strengthened in order to

attain international standards regarding learning outcomes, a need-based

and layered structure will be formed in foreign language education,

early childhood education will be generalized with a priority for 5 years

old children and an education process which considers the student's

interest, talent and personality will be conducted.

✔ ✔ ✔

Institutional capacity of vocational training institutions will be improved

in line with the economic targets, the quality of the labor force will be

enhanced by expanding thematic vocational schools as well through

measurement and certification

✔ ✔ ✔

HEALTH

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Primary healthcare services will be strengthened and its

efficiency within the health system will be increased. ✔

✔

Performance in the areas of clinical quality, citizen satisfaction,

operational efficiency and productivity in public hospitals will be

systematically followed and health personnel will become part of

the incentive mechanism. Citizen satisfaction results will be

included in performance assessments of institutions and health

workers.

✔ ✔

In order to prevent obesity in coordination with relevant

stakeholders for the development of healthy eating habit, existing

programs will be disseminated and additional arrangements will

be implemented.

✔

✔

In order to provide cost advantage, Supply Sharing Platform

(TPP) and supply chain improvement studies will be carried out. ✔

Projects will be conducted in order to optimize the use of drugs

and to reduce drug costs by carrying out awareness and

monitoring and evaluation activities.

✔ ✔

✔

Within the scope of R&D studies in the pharmaceutical sector,

the number of clinical research centers and units will be

increased and their infrastructure will be improved.

✔

Protective and preventive health services will be developed in

order to reduce health expenditures. ✔ ✔ ✔

YOUTH AND SOCIETY

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Social assistance beneficiary citizens' access to other public

services (social service, employment, education, health, etc.) will

be increased by the transition to Social Aid Plus (+) period.

The Integration of Integrated Social Assistance Information

system and Family Information System will be provided.

Individuals in need of long-term care will be assisted in their

own environment; and home care, day-care and short-term care

services will be developed and also local governments will be

encouraged to increase the services they provide.

In order to protect youth from crime and abuse, educational

services will be carried out in coordination with parents.

Alternative projects and awareness-raising activities will be

carried out in order to protect the mental and physical health of

youth by keeping them away from all negative habits especially

violence, drug addiction, internet and social media dependencies.

Projects and activities that support the personal and spiritual

development during the period of convictions of youth involved

in crime will be increased in order to enable them to reintegrate

into society after the periods of conviction and to provide a

positive example to the society by staying away from crime.

According to the need and demand, studies will be carried out to

establish youth centers in towns where youth centers don’t exist

by allocating appropriate immovable from relevant institutions

and organizations. For those locations where youth centers

cannot be established, activities and projects for young people

will be carried via mobile youth centers.

PUBLIC ORDER AND SECURITY

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In order to foresee and prevent the events that threaten the public

order and security, projects that use information technologies

effectively will be implemented.

Risk management will be proceed by prioritizing preventive and

protective security services, and risk management and analysis

mechanism will be established in fighting against crimes related to

organized crimes.

By creating an integrated border security system, irregular

migration will be prevented and efficiency will be increased in the

fight against smuggling, organized crime and terrorism.

Critical asset inventories will be identified in order to minimize

the impact of disasters and emergency situations on economic

activity.

ANNEX TABLE 1:

MAIN ECONOMIC INDICATORS 2017 2018 (RE) 2019 (P) 2020 (P) 2021 (P)

GROWTH

GDP (Billion TL, Current Prices) 3,107 3,741 4,450 5,150 5,742

GDP (Billion Dollars, Current Prices) 851 763 795 858 926

Per Capita Income (GDP, USD) 10,602 9,385 9,647 10,292 10,973

GDP Growth (1) 7.4 3.8 2.3 3.5 5.0

Total Consumption (1) 5.9 3.7 1.9 2.5 3.9

Public 1.5 3.5 1.4 1.6 3.0

Private 6.6 3.8 2.0 2.6 4.0

Total Fixed Capital Investment (1) 7.8 1.8 -3.2 5.1 6.7

Public 8.1 1.4 -36.1 -1.7 3.4

Private 7.8 1.8 2.0 5.8 6.9

Total Domestic Savings / GDP 25.4 25.9 25.3 26.3 26.8

Public 2.4 1.2 0.6 0.1 0.3

Private 23.0 24.7 24.8 26.2 26.5

Total Investment-Saving Difference / GDP (2) -5.6 -4.6 -3.2 -2.7 -2.5

Public -1.9 -3.0 -2.1 -2.6 -2.3

Private -3.7 -1.7 -1.1 -0.1 -0.2

Total Final Domestic Demand (1) 6.4 3.2 0.5 3.2 4.7

Net Export Contribution to Growth 0.1 1.4 1.5 0.2 0.2

EMPLOYMENT

Population (Mid-year, Thousand Person) 80,313 81,339 82,377 83,393 84,405

Labor Force Participation Rate (%) 52.8 53.2 53.7 54.2 54.7

Employment (Thousand Person) 28,189 28,677 29,116 29,877 30,952

Employment Rate (%) 47.1 47.2 47.2 47.8 48.8

Unemployment Rate (%) 10.9 11.3 12.1 11.9 10.8

FOREIGN TRADE

Export (fob) (Billion Dollars) 157.0 170.0 182.0 191.0 204.4

Import (cif) (Billion Dollars) 233.8 236.0 244.0 252.0 267.0

Crude Oil Price - Brent (Dollar/Barrel) 54.3 72.8 73.2 69.7 67.0

Energy Import (Billion Dollars) 37.2 46.0 43.0 44.3 45.2

Foreign Trade (Billion Dollars) -76.8 -66.0 -62.0 -61.0 -62.6

Export / Import (%) 67.1 72.0 74.6 75.8 76.6

Foreign Trade Volume / GDP (%) 45.9 53.2 53.6 51.6 50.9

Tourism Revenues (Billion Dollars) 22.5 29.0 34.0 38.0 42.0

Current Account Balance (Billion Dollars) -47.4 -36.0 -26.0 -23.5 -24.1

Current Account Balance / GDP (%) -5.6 -4.7 -3.3 -2.7 -2.6

Current Account Balance Excl. Gold/ GDP (%) -4.4 -3.3 -2.7 -2.3 -2.2

INFLATION

GDP Deflator 10.8 16.0 16.3 11.8 6.2

CPI (End of Year, % Change) 11.9 20.8 15.9 9.8 6.0

(1) Percentage change at constant prices, (2) The difference between the total savings-investment gap and the current account deficit is due to the use

of export and import oriented exchange rates in national income calculations.

RE: Realization estimate

P: Program

ANNEX TABLE 2:

CENTRAL GOVERNMENT BUDGET 2017 2018 (RE) 2019 (P) 2020 (P) 2021 (P)

(Billion TL)

Expenditures 678.3 821.8 961.0 1,112.4 1,230.9

Primary Expenditures 621.6 745.4 843.7 964.7 1,059.5

Interest Expenditures 56.7 76.4 117.3 147.7 171.4

Revenues 630.5 749.6 880.4 1,014.3 1,133.9

General Budget Tax Revenues 536.6 630.5 756.5 887.0 1,002.5

Other Revenues 93.9 119.1 123.9 127.3 131.4

Budget Balance -47.8 -72.1 -80.6 -98.1 -97.0

Primary Balance 8.9 4.3 36.7 49.6 74.3

Program Defined Expenditures 621.6 745.4 843.6 964.7 1,059.5

Program Defined Revenues 602.4 707.2 841.4 981.8 1,106.8

Program Defined Balance -19.2 -38.2 -2.2 17.1 47.3

(Percent of GDP, %)

Expenditures 21.8 22.0 21.6 21.6 21.4

Primary Expenditures 20.0 19.9 19.0 18.7 18.5


Revenues 20.3 20.0 19.8 19.7 19.7

General Budget Tax Revenues 17.3 16.9 17.0 17.2 17.5

Other Revenues 3.0 3.2 2.8 2.5 2.3

Budget Balance -1.5 -1.9 -1.8 -1.9 -1.7

Primary Balance 0.3 0.1 0.8 1.0 1.3

Program Defined Expenditures 20.0 19.9 19.0 18.7 18.5

Program Defined Revenues 19.4 18.9 18.9 19.1 19.3

Program Defined Balance -0.6 -1.0 0.0 0.3 0.8


P: Program

ANNEX TABLE 3:

PUBLIC SECTOR GENERAL BALANCE (1) 2017 2018 (RE) 2019 (P) 2020 (P) 2021 (P)

(Billion TL)

Public Sector General Balance (PSGB) -56.2 -101.1 -69.3 -86.4 -87.4

General Government -57.3 -88.3 -69.1 -86.8 -93.9

Central Government Budget -47.8 -72.1 -80.6 -98.1 -97.0

Local Governments -16.0 -22.0 -4.5 -6.2 -9.1

Extra Budgetary Funds -8.8 -4.6 -0.9 -1.2 -0.8

Unemployment Insurance Fund 13.5 11.0 17.8 19.6 13.9

Social Security Institutions -16.7 -21.5 -28.1 -35.3 -39.7

General Health Insurance 18.4 21.5 28.1 35.3 39.7

Revolving Funds 0.1 -0.7 -1.0 -0.9 -0.9

SEE’s 1.2 -12.8 -0.2 0.4 6.6

Public Sector Primary Balance 5.1 -17.8 57.0 71.4 94.6

PSGB Exc. Interest Exp. and Priv. Rev. 0.1 -25.8 47.0 49.4 78.6

(Percent of GDP, % )

Public Sector General Balance (PSGB) -1.8 -2.7 -1.6 -1.7 -1.5

General Government -1.8 -2.4 -1.6 -1.7 -1.6

Central Government Budget -1.5 -1.9 -1.8 -1.9 -1.7

Local Governments -0.5 -0.6 -0.1 -0.1 -0.2

Extra Budgetary Funds -0.3 -0.1 0.0 0.0 0.0

Unemployment Insurance Fund 0.4 0.3 0.4 0.4 0.2



Revolving Funds 0.0 0.0 0.0 0.0 0.0

SEE’s 0.0 -0.3 0.0 0.0 0.1

Public Sector Primary Balance 0.2 -0.5 1.3 1.4 1.6

PSGB Exc. Interest Exp. And Priv. Rev. 0.0 -0.7 1.1 1.0 1.4

(1) Public sector covers; central government budget, local governments, unemployment insurance fund, social security institutions,

SEE’s, revolving funds, extra budgetary funds and general health insurance scheme. RE: Realization estimate

P: Program

ANNEX TABLE 4:

PUBLIC SECTOR GENERAL

BALANCE

(PROGRAM DEFINED) (1)

2017 2018 (RE) 2019 (P) 2020 (P) 2021 (P)

(Billion TL)

Public Sector -32.3 -78.9 -7.9 11.0 46.1

General Government -32.8 -66.6 -8.0 10.3 39.2

Central Government Budget -19.2 -38.2 -2.2 17.1 47.3

Local Governments -13.9 -19.0 0.4 -0.6 -3.1

Extra Budgetary Funds -4.4 -4.5 -0.8 -1.1 -0.8

Unemployment Insurance Fund (2) 3.5 -3.6 -3.6 -3.4 -2.5



Revolving Funds -0.5 -1.3 -1.7 -1.7 -1.8

SEE’s 0.5 -12.4 0.2 0.7 6.9

(Percent of GDP, %)

Public Sector -1.0 -2.1 -0.2 0.2 0.8

General Government -1.1 -1.8 -0.2 0.2 0.7

Central Government Budget -0.6 -1.0 0.0 0.3 0.8

Local Governments -0.4 -0.5 0.0 0.0 -0.1

Extra Budgetary Funds -0.1 -0.1 0.0 0.0 0.0

Unemployment Insurance Fund (2) 0.1 -0.1 -0.1 -0.1 0.0



Revolving Funds 0.0 0.0 0.0 0.0 0.0

SEE’s 0.0 -0.3 0.0 0.0 0.1

(1) Excluding interest payments and revenues, privatization revenues, dividends from public banks and some specific revenues and

expenditures.

(2) Including Guilds’ Saving Fund


P: Program

(1) Excluding rebates.


P: Program

ANNEX TABLE 5:

OTHER INDICATORS OF PUBLIC SECTOR 2017 2018 (RE) 2019 (P) 2020 (P) 2021 (P)

(Percent of GDP, %)

Public Disposable Income 12.8 11.8 11.0 10.5 10.6

Public Consumption -10.4 -10.6 -10.4 -10.4 -10.3

Public Saving 2.4 1.2 0.6 0.1 0.3

Public Investment -4.3 -4.2 -2.7 -2.6 -2.6

Public Saving-Investment Gap -1.9 -3.0 -2.1 -2.6 -2.3

Public Sector Privatization Revenues 0.2 0.2 0.2 0.4 0.3

Tax Burden (Including Social Security Premiums) (1) 24.6 24.3 24.2 24.4 24.6

Tax Burden (Excluding Social Security Premiums) (1) 17.7 17.3 17.5 17.7 18.0

EU Defined General Gov. Debt Stock 28.3 31.1 28.5 28.2 27.2

ANNEX TABLE 6:

GENERAL GOVERNMENT

BUDGET BALANCE (1)

2017 2018 (RE) 2019 (P) 2020 (P) 2021 (P)

(Billion TL)

Revenues 1,028.2 1,224.3 1,424.8 1,638.9 1,809.1

Taxes 549.8 644.8 773.9 908.1 1,026.2

Non-Tax Revenues 47.8 71.4 63.8 72.9 82.1

Factor Income 144.8 168.3 199.3 199.7 206.5

Social Funds 280.7 331.9 377.8 436.1 478.3

Privatization Revenues 5.0 8.0 10.0 22.0 16.0

Expenditures 1,085.5 1,312.6 1,493.9 1,725.6 1,903.0

Primary Expenditures 1,025.2 1,231.2 1,369.2 1,569.4 1,722.3

Current Expenditures 480.1 589.2 673.0 769.0 838.8

Capital Expenditures 115.1 136.4 104.8 115.2 127.0

Transfer Expenditures 490.3 587.0 716.1 841.4 937.1

Stok Revaluation Fund 0.0 0.0 0.0 0.0 0.0


General Government Balance -57.3 -88.3 -69.1 -86.8 -93.9

Primary Balance 3.0 -6.9 55.5 69.5 86.7

Balance Excluding Privatization Revenues -62.3 -96.3 -79.1 -108.8 -109.9

Balance Excluding Priv. Rev. and Int. Exp. -2.0 -14.9 45.5 47.5 70.7

(Percent of GDP, %)

Revenues 33.1 32.7 32.0 31.8 31.5

Taxes 17.7 17.2 17.4 17.6 17.9

Non-Tax Revenues 1.5 1.9 1.4 1.4 1.4

Factor Income 4.7 4.5 4.5 3.9 3.6

Social Funds 9.0 8.9 8.5 8.5 8.3

Privatization Revenues 0.2 0.2 0.2 0.4 0.3

Expenditures 34.9 35.1 33.6 33.5 33.1

Primary Expenditures 33.0 32.9 30.8 30.5 30.0

Current Expenditures 15.5 15.8 15.1 14.9 14.6

Capital Expenditures 3.7 3.6 2.4 2.2 2.2

Transfer Expenditures 15.8 15.7 16.1 16.3 16.3

Stok Revaluation Fund 0.0 0.0 0.0 0.0 0.0


General Government Balance -1.8 -2.4 -1.6 -1.7 -1.6

Primary Balance 0.1 -0.2 1.2 1.3 1.5

Balance Excluding Privatization Revenues -2.0 -2.6 -1.8 -2.1 -1.9

Balance Excluding Priv. Rev. and Int. Exp. -0.1 -0.4 1.0 0.9 1.2

(1) General government includes central government budget, local governments, unemployment insurance fund, social security

institutions, revolving funds, extra-budgetary funds and general health insurance scheme.


P: Program

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