Although budget is a law indeed, it has a distinctive feature with respect to the preparation, discussion and enactment of budget Draft Law in the parliament. Budget law ensures that the activities of public management are in compliance with legal norms. The Constitution of the Republic of Turkey and Law 5018, the Public Financial Management and Control Law (PFMC Law), constitute legal basis for the state budget. Law 5018 sets forth the provisions on the basis and form of the state budget, the preparation principles and the budget implementation, and defines the required legal principles as well.
Medium Term Program
Pursuant to Article 16 of PFMC Law, multi-annual budget preparation process begins with the adoption of Medium Term Program by the Council of Ministers until the end of the first week of September at the latest, which includes macro policies, principles, basic economic figures as targets and indicators and is prepared by the Ministry of Development.
Hence, the Medium Term Program roughly determines public policies and practices, and also directs resource allocation accordingly. Besides, serving as a road map for enhancing predictability for both public and private sector, the abovementioned program contributes to confidence and stability ensuring that recent improvements in social and economic field are maintained on a sound ground.
Providing a set of priorities, objectives and policies consistent with each other, the Medium Term Program includes the basic axes of development and main industries as well as macro policies.
Preparing budgets for ministries and institutions, making administrative and legal regulations as well as decision-making and implementation processes of the institutions are based on the objectives and priorities of the program.
The program with a three-year perspective that provides a dynamic structure is annually reviewed considering the results of the annual implementation and the changes in general conditions. In this regard, the program implementations and the external developments that could affect the program progress are effectively monitored and assessed. The Ministry of Development is responsible for monitoring and evaluating the implementation in line with the objectives and priorities stated in the program and for providing the Council of Ministers with the relevant information as well.
The Medium Term Program;
- is a road map for enhancing the predictability for both public and private sector.
- provides a set of priorities, objectives and policies in various areas consistent with each other.
- includes the basic axes of development and main industries as well as macro-policies.
- establishes the priorities to be focused on during the three-year period so that long-term goals could be accomplished.
- provides a dynamic structure that is annually reviewed considering the results of the implementations and the changes in general conditions
- has a three-year perspective.
Medium Term Fiscal Plan
The second document issued in budget preparation process is the Medium Term Fiscal Plan. Under the PFMC Law, the Medium Term Fiscal Plan includes the targeted deficit and borrowing positions, total revenue and expenditure estimates for the following three years as well as appropriation proposal ceilings of public administrations in line with the Medium Term Program. Issued by the Ministry of Finance, the Medium Term Fiscal Plan is published in the Official Gazette after being concluded by the High Planning Council before the 15th of September at the latest.
The Medium Term Fiscal Plan is prepared so as to carry out the basic goals and policies defined in the Medium Term Program, and sets out the central government budget figures and the institutional appropriation proposal ceilings.
The general and special budget administrations determine their institutional priorities within the limits defined in the abovementioned two documents and prepare their own budgets accordingly.
Strengthening fiscal discipline through increasing the efficiency in the preparation and implementation of budget is the top priority among the objectives of the public finance policies. In this framework, the multi-annual budgetary framework considerably contributes to the accomplishment of the abovementioned goal.
Besides, in order for the stated policies to be successful, they should receive public support increasing the participation and ensuring sufficient coordination and cooperation among the public administrations in the development and implementation phases of the policies. The abovementioned support and cooperation will contribute to increasing transparency and accountability in the budget management.
The most important element to be included in the Medium Term Fiscal Plan is the central government budget appropriation proposal ceilings based on economic classification carried out taking the policy priorities and macroeconomic indicators stated in the Fiscal Plan into consideration. The ceiling indicates the maximum resource allocated for the services that the concerning institution may provide. In this regard, all or some parts of the stated resource may be allocated to the institution depending on the need for the services stated in the budget proposal of the institution.
Budget Call and Budget Preparation Guide
After publishing the Medium Term Program and the Medium Term Fiscal Plan, in order to guide the preparation process of the budget proposals and investment programs of the public administrations; Budget Call and its annex, the Budget Preparation Guide, are issued by the Ministry of Finance; and the Investment Circular and its annex, the Investment Program Preparation Guide are issued by the Ministry of Development, and all shall be published in the Official Gazette before the 15th of September .
The Budget Preparation Guide and Investment Program Preparation Guide include the ways and methods to be followed, technical details and standards as well as the forms to be used in the budget preparation.
Preparing Budget Proposals
In preparing revenue and expenditure proposals;
- Basic figures and the principles and procedures set forth in the Medium Term Program,
- Appropriation ceilings determined under the development plan, annual program priorities as well as strategic plans of the relevant institution.
- Multi-annual budgetary framework in compliance with strategic plans of the public administrations,
- Performance objectives of the administration are included.
Budget Preparation Studies by General and Special Budget Administrations
Public administrations shall prepare their budget revenue and expenditure proposals under the principles stated in the Budget Preparation Guide and their strategic plans together with their statement of reasons and send them to the Ministry of Finance before the end of September after they are signed by their competent authorities. The investment proposals of public administrations shall be submitted for evaluation to the Ministry of Development within the same period of time. Public administrations shall adopt a participative manner and ensure that appropriation requests of the decentralized units are reflected in the proposals as well.
 The expression “before the end of May” stated in the paragraph 2 of the Article 16 titled “Medium term program, fiscal plan and budget preparation guide” of the Law 5018 was amended into “before the first week of September at the latest” and the expression “before the end of June” stated in the paragraph 4 was amended into “before 15th of September at the latest” with the Article 17 of the Decree 659 on 09/26/2011
The expression “July” stated in the paragraph 4 of Article 17 titled “Preparing the central government budget” of the Law 5018 was amended into “September at the latest” with Article 17 of the Decree 659.
Public administrations with special budgets shall issue their revenue proposals for the related year and the following two years as well as their expenditure proposals and send them to Ministry of Finance (General Directorate of Budget and Fiscal Control) before the end of September at the latest. The general budget revenue proposals shall be issued by the Ministry of Finance.
Expenditure proposals shall be issued in line with the institutional, functional and economic classification system (analytical budget classification) set by the Ministry of Finance, whereas revenue proposals shall be issued according to the economic classification.
The budget revenue and expenditure proposals shall be issued with the statement of reasons and signed by their competent authorities.
Budget Preparation Studies by Regulatory and Supervisory Agencies
Regulatory and supervisory agencies provided in Chart (III) annexed to PFMC Law shall prepare their budgets considering the three-year budgeting approach in line with the institutional, functional and economic classification system.
The abovementioned agencies, shall submit their budgets directly to the Turkish Grand National Assembly before the end of September, and send a copy to the Ministry of Finance (General Directorate of Budget and Fiscal Control) to be annexed to Central Government Budget Draft Law and send their investment proposals to the Ministry of Development to be associated with the Investment Program.
Budget Negotiations in the Ministry of Finance
The Budget proposal made by the line institution is finalized by the Ministry of Finance the General Directorate of Budget and Fiscal Control. The proposals are scrutinized by the General Directorate of Budget and Fiscal Control, considering their compliance with principles and standards stated in the budget call and budget preparation guide and adequacy of the legal grounds and economic reasons for appropriation requests. The Ministry of Finance and the Ministry of Development work in close cooperation during these studies.
Other Steps of the Budget Preparation Process
- Studies on the text of the budget law; the General Directorate of Budget and Fiscal Control
- Investment figures coordination meeting; the Ministry of Development, the Ministry of Finance, Under-secretariat of Treasury
- High Planning Council meeting
- Finalizing the budget proposals of public administrations; the General Directorate of Budget and Fiscal Control, the Ministry of Development
- Finalizing the budget draft law
- Sending the budget draft law to the Parliament; the Council of Ministers
The following shall be attached to Central Government Budget Draft Law (to be considered in the budget negotiations in the parliament);
- Budget memorandum including the Medium Term Fiscal Plan,
- Annual economic report,
- Chart for public revenues renounced due to tax exemptions, exceptions, reductions and similar practices,
- Public debt management report,
- Last two years’ budget reviews and next two years’ revenues and expenditures estimates of public administrations within the scope of general government,
- Budget estimates of local administrations and social security institutions,
- List of public administrations, other agencies and institutions that are not within the scope of central government but subsidized from the central government budget.
The Turkish Grand National Assembly, Turkish Court of Accounts and the regulatory and supervisory agencies shall submit their budgets directly to the Turkish Grand National Assembly before the end of September, and send a copy to the Ministry of Finance.
Enactment of Budget
Budget Negotiations in the Plan and Budget Committee
The budget draft law submitted by the Council of Ministers to the Parliament is sent to the Plan and Budget Committee by the Speaker of the Parliament. The abovementioned committee scrutinizes the budget draft law technically, and the studies carried out by this committee shall be completed within 55 days at the latest.
The Plan and Budget Committee is composed of 40 members, 25 of which are from the ruling party. Members have the right to make motions with regard to the budget draft law in the agenda of the Committee and to make amendments on condition that their motions are accepted.
The Committee individually negotiates the budget proposals of the administrations within the central government budget. The draft law is sent to the General Assembly of the Parliament once it is approved on the basis of programs and adopted after necessary amendments are made, together with a committee report including the amendments and annexes.
Negotiations on the Budget Draft Law in the Plenary Session of Parliament
Budget negotiations in the Plenary Session start with the speech of the Minister of Finance. 20 days are given for budget negotiations in the Plenary Session.
After budget is entirely negotiated, the text of the central government budget draft law is discussed in terms of its articles; revenue and expenditure charts are discussed in terms of public administrations, and the abovementioned draft law is voted in parts. During the budget negotiations, in accordance with Article 162 of the Constitution, parliamentarians are not allowed to make expenditure-raising or revenue-decreasing proposals. Budget negotiations in the Plenary Session are completed once the revenue budget and other articles of the draft law are negotiated and voted.
Approving and Publishing the Budget Draft Law before the Fiscal Year Begins
Upon the completion of the budget negotiations in the plenary session, the entire budget is put to open vote. If the number of affirmative votes is higher than negative votes, then the budget is deemed approved by the Parliament.
The draft law adopted by the Parliament is submitted to the approval of the President. As per Article 89 of the Constitution, the President is not allowed to send the budget law to the parliament to be negotiated again. The Central Government Budget Law approved by the President is published in the Official Gazette before the beginning of the fiscal year and enters into force as of January, 1st .