NEW ECONOMY PROGRAM BALANCE-DISCIPLINE-TRANSFORMATION 2019-2021
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REPUBLIC OF TURKEY
MINISTRY OF TREASURY AND FINANCE
NEW ECONOMY PROGRAM
BALANCE-DISCIPLINE-TRANSFORMATION
2019-2021
MEDIUM TERM PROGRAMINDEX
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. ANNEXES1. 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 tocontraction 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 theprogram 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. Policies and Measures: 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.Policies and Measures: 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 togrowth. 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.
Policies and Measures:
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 sectorconsists 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:More Equitable
Workforce and
Strong Society
Healthy and
Sustainable
Balancing
Economic
Qualified
Sharing
Growth
FINANCIAL SYSTEM
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.Workforce and
More Equitable
Strong Society
Healthy and
Sustainable
Balancing
Economic
Qualified
Sharing
Growth
LABOR MARKET
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.More Equitable
Workforce and
Strong Society
Healthy and
Sustainable
Balancing
Economic
Qualified
Sharing
Growth
JUSTICE
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.More Equitable
Workforce and
Strong Society
Healthy and
Sustainable
Balancing
Economic
Qualified
Sharing
Growth
ENVIRONMENT AND URBANISM
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.More Equitable
Workforce and
Strong Society
Healthy and
Sustainable
Balancing
Economic
Qualified
Sharing
Growth
EDUCATION
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 certificationMore Equitable
Workforce and
Strong Society
Healthy and
Sustainable
Balancing
Economic
Qualified
Sharing
Growth
HEALTH
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.More Equitable
Workforce and
Strong Society
Healthy and
Sustainable
Balancing
Economic
Qualified
Sharing
Growth
YOUTH AND SOCIETY
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.More Equitable
Workforce and
Strong Society
Healthy and
Sustainable
Balancing
Economic
Qualified
Sharing
Growth
PUBLIC ORDER AND SECURITY
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:
2017 2018 (RE) 2019 (P) 2020 (P) 2021 (P)
MAIN ECONOMIC INDICATORS
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: ProgramANNEX TABLE 2:
2017 2018 (RE) 2019 (P) 2020 (P) 2021 (P)
CENTRAL GOVERNMENT BUDGET
(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
Interest Expenditures 1.8 2.0 2.6 2.9 3.0
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
RE: Realization estimate
P: ProgramANNEX TABLE 3:
2017 2018 (RE) 2019 (P) 2020 (P) 2021 (P)
PUBLIC SECTOR GENERAL BALANCE (1)
(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
Social Security Institutions -0.5 -0.6 -0.6 -0.7 -0.7
General Health Insurance 0.6 0.6 0.6 0.7 0.7
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: ProgramANNEX TABLE 4:
PUBLIC SECTOR GENERAL
2017 2018 (RE) 2019 (P) 2020 (P) 2021 (P)
BALANCE
(PROGRAM DEFINED) (1)
(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
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 -0.5 -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
Social Security Institutions -0.5 -0.6 -0.6 -0.7 -0.7
General Health Insurance 0.6 0.6 0.6 0.7 0.7
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
RE: Realization estimate
P: ProgramANNEX TABLE 5:
2017 2018 (RE) 2019 (P) 2020 (P) 2021 (P)
OTHER INDICATORS OF PUBLIC SECTOR
(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
(1) Excluding rebates.
RE: Realization estimate
P: ProgramANNEX TABLE 6:
GENERAL GOVERNMENT 2017 2018 (RE) 2019 (P) 2020 (P) 2021 (P)
BUDGET BALANCE (1)
(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
Interest Expenditures 60.3 81.4 124.7 156.2 180.7
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
Interest Expenditures 1.9 2.2 2.8 3.0 3.1
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.
RE: Realization estimate
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