Macroeconomic Conjunture Notes
Note 10- AN ANALYSIS OF PUBLIC FINANCE WITHIN THE FRAMEWORK OF THE OMNIBUS LAW PROPOSAL OF JULY 5, THE TAX REGULATIONS ISSUED AS A PRESIDENTIAL DECREE ON JULY 7 AND THE SUPPLEMENTARY BUDGET PROPOSAL FOR 2023
On July 5, 2023, the "Legislative Proposal on the Amendment of Certain Laws and the Decree Law No. 375 on the Amendment of Certain Laws and the Legislative Decree Law No. 375 with the Additional Motor Vehicles Tax for the Compensation of the Economic Losses Caused by the Earthquakes Occurred on 6/2/2023" was submitted to the Turkish Grand National Assembly, which envisages regulations that will affect the FMU as listed in the annex. The supplementary budget proposal increases total budget appropriations by 25.1% and total budget revenues by 29.3% based on tax revenues. Since the increase is equal on both sides, the budget deficit remains unchanged. The 33.5% increase in tax revenues, which is expected due to cyclical (changes in macro parameters) and policy decisions, is programmed to cover the increase in public expenditures excluding personnel. Although the fiscal impact of other tax measures introduced under the Omnibus bill, especially those related to tax expenditures, is considered to be limited, the start of a study on this issue is considered encouraging. In the following period, it is important to review tax exemptions and exemptions in a way to include many parameters and to clearly share the results with the public and relevant actors.
Note 9- 2022 FIRST QUARTER INFLATION FORECAST
Changes in the exchange rate are directly reflected on the prices of imported core goods such as durable consumer goods. Moreover, changes in the exchange rate can also affect inflation through imported inputs (energy and other intermediate goods) used in production. This "exchange rate pass-through" effect of exchange rate changes on domestic prices of goods and services has the greatest impact on inflation. Considering the short-term effects of the recent implementation of the exchange rate-protected TL time deposit accounts to stabilize the exchange rate, it can be assumed that the exchange rate will move within a more predictable band in the next 3 months. Within the framework of the explanations below, it is foreseeable that inflation, even if it remains in the 40% range on an annual basis, especially during the first quarter, will gradually decline afterwards and close the year at levels that are lower than the first quarter figures of 2022, especially with the strong base effect from December.
