Page 12 - bne_March2019_20190306 magazine

12 I Companies & Markets bne March 2019
“Every realization, every indicator reveals our firm stance in budget discipline,” Turkish Finance Minister Berat Albayrak said on Twitter, commenting on the January budget figures.
No information on spending
Albayrak praised the achieved budget and primary surpluses as well as the 67% annual increase in revenues to TRY97bn in January, but he did not disclose any information on spending.
The budget data showed that the government increased its spending by 62% y/y to TRY92bn in January from TRY56.5bn a year ago while its tax revenues rose by 7% y/y to TRY55.7bn from TRY52bn.
Albayrak said on January 9 that the government was previously expecting to receive TRY20bn from the central bank’s profits but would in fact obtain TRY37bn within the month. The general assembly of the Central Bank of the Republic of Turkey (CBRT) approved the early transfer of
“To populist President Recep Tayyip Erdogan there is plenty of blame to spread around both at home and abroad for Turkey’s economic woes”
its 2018 profit to the government and other shareholders at an extraordinary meeting on January 18. The Central Bank normally transfers profit owed to the Treasury in April.
CBRT governor Murat Cetinkaya on February 14 voiced the possibility of easing liquidity.
Excluding the one-time revenues from the early transfer of the central bank profit, the central government budget posted a deficit of TRY30bn in January, Muammer Komurcuoglu of Is Yatirim told Reuters.
Is Yatirim expects a budget deficit of TRY100bn, or 2.3% of GDP in 2019, versus a government target of TRY81bn, or 1.8% of GDP.
“In addition to the slowdown in economic activity, tax revenues displayed a weak outlook due to incentives, while the rapid rise in non-interest expenditures stood out. On the other hand, the negative effect of the tax losses on budget performance was lim- ited by transferring CBRT’s profit to the budget in advance. This transfer, which is one-off for each year, raises concerns about budget performance for the rest of 2019 and points to the need for a tightening of fiscal policies,” Isbank Research said in a note.
Also on February 15, the Ministry of Treasury and Finance said in a separate statement that a World Bank loan agreement worth €222mn for the Turkey Irrigation Modernisation Project has been signed.
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Back on January 22, the World Bank said in a press release that its board of executive directors had approved a $252mn loan and a $2mn grant for the project.
“The agriculture sector employs about 21% of the population and accounts for 60% of the rural workforce in Turkey,” Mariam Sherman, World Bank acting country director for Turkey, said.
The project is being led by the Ministry of Treasury and Finance, with Turkey’s State Hydraulic Works (DSI) as the implementing agency for the project, according to the World Bank.
Neither the ministry nor the World Bank specified when the project would be concluded. However, the impact could be felt in the official figures for February inflation.
“Good tidings” from the state vegetable offensive
Headlining more “good tidings” for February inflation, pro- Erdogan media have claimed that supermarket chains cut their vegetable prices countrywide after the government launched 50 mobile kiosks in Istanbul, home to more than 15mn people, and 30 more in Ankara, home to more than 5.5mn people, to sell veg at around half-price compared to the private sector.
Also on February 15, state statistical institute TUIK announced in a regular data release that the unemployment rate reached 12.3% in November. That’s the highest level registered since February 2017. Youth unemployment gained to 23.6%.
“Turkey – clear signs of fallout from crisis, with unemployment picking up to 12.3% in November. Seasonals see pick up this time of year (before local elections), but it’s higher 200bps which shows the cost of the crisis,” Tim Ash of Bluebay Asset Management said on Twitter.
However, as one response to Ash from a Turkish Twitter user inferred – “Please, for god's sake, take a look at how unem- ployment is calculated in Turkey, then make comments about it. If the data is bad, comments can't make sense, can they?” – there is a question as to whether analysts should actually take the Turkish unemployment data with a bucket of salt.
The TUIK calculates the workforce at around half of the adult population. According to its data, the number of people in the Turkish population of towards 82mn older than 15-years-old stood at 60.9mn as of November (60.8mn as of October) but TUIK calculates the labour force at 32.3mn (32.7mn as of Octo- ber). Of those people, 28.3mn are employed (28.9mn in Octo- ber), including 5.02mn people in agriculture (5.3mn in October).
Public sector employment grew by 21% y/y to 4.35mn people in Q4, according to data compiled by the Turkish presidency’s budget and planning department, Reuters reported.
“November also saw employment generation turn negative on an annual basis for the first time since mid-2009... On
a sequential basis, job creation in November was at -228K, the worst reading since Jun-16, driven by all sectors, namely