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MoND 2022 Budget Proposal Submitted to the Plenary of the Turkish Grand National Assembly

The FY 2022 Central Government Budget Proposal, including the Ministry of National Defense (MoND) 2022 Central Government Budget Proposal at an amount of TRY 80.439.536, was submitted by Vice President Fuat OKTAY on October 20, 2021, to the Turkish Grand National Assembly (TGNA) Plan and Budget Committee.

Date: October 26, 2021

According to the meeting schedule of the Parliamentary Plan and Budget Committee, the MoND budget proposal will be deliberated on Wednesday, November 17; the budget proposals of the Ministry of Interior, the General Directorate of Security, the Gendarmerie General Command, and the Coast Guard Command on Monday, November 22; and the National Intelligence Organization, the General National Security Council Secretariat and the Presidency of Defense Industries on Friday, November 26. The debates on 2022 budgets of the Ministries and Institutions will be concluded on Friday, November 26. The articles of the 2022 Central Government Budget Bill and the 2020 Central Government Final Accounts Bill will also be debated on Friday, November 26. Following the completion of the debates in the TGNA Plan and Budget Committee, the 2022 budget will be debated at the Plenary in December.

The 2022 budget of the Ministry of National Defense signifies an increase of approximately 30% (TRY 18 Billion 954 Million 597 Thousand) compared to the 2021 budget (MoND 2021 budget was TRY 61 Billion 484 Million and 939 Thousand). Although it is above the annual inflation rate, there is actually a decrease, not an increase, in US$ terms, as TRY has depreciated by more than 30% as of October in 2021 against the US$.

TRY 224 Million 622 Thousand is allocated for Direct Investment (Capital Expenditures) in the Budget (TRY 226 Million 612 Thousand in 2021), TRY 1 Billion 588 Million 787 Thousand for Current Transfers (TRY 861 Million 287 Thousand in 2021), TRY 27 Billion 072 Million 565 Thousand for expenses for the Purchase of Goods and Services (TRY 20 Billion 982 Million 973 Thousand in 2021) and TRY 44 Billion 852 Million 969 Thousand for Personnel Expenses (TRY 34 Billion 195 Million 104 Thousand in 2021). With the Social Security Premium Expenditures amounting to TRY 6 Billion 700 Million 565 Thousand (TRY 5 Billion 218 Million 963 Thousand TRY in 2021), the total amount allocated for Personnel Expenses in the budget reaches TRY 51.55 Billion. In the 2022 Central Government Budget Proposal, the estimated budget for the MoND for 2023 is approximately TRY 91.019 Billion, and the budget estimate for 2024 is TRY 101.334 Billion.

The share allocated for Presidency of Defense Industries (SSB) in the 2022 Central Government Budget proposal amounted to TRY 153.974 Million (approximately TRY 120.1 Million in 2021). The majority of the proposed budget covers the personnel expenses of the SSB, and the purchase of materials and services required for management activities. The total amount allocated for Personnel Expenses in the SSB budget, together with Social Security Premium Expenditures, amounts to approximately TRY 132 Million.

In addition to the National Budget, the Defense Industry Support Fund (SSDF) is the key source in financing the modernization efforts of the TAF, the General Directorate of Security, the Gendarmerie General Command, the Coast Guard Command, and the National Intelligence Organization and meeting their needs from national resources. SSDF, designed to provide continuous and steady resources, except for the general budget, for the supply of modern defense and security products and investments to be made in the field of Defense Industry, is also an important source in the financing of R&D projects. However, the Minister of Treasury and Finance is authorized to use the allocation in the budget of the Ministry of Treasury and Finance by funds transfer to the Defense Industry Support Fund for the development of the Turkish Defense Industry.

Although SSDF's revenue and expense figures for 2021 have yet to be announced, SSDF's revenue in 2020 amounted to TRY 26 Billion 765 Million 847 Thousand while total expenses were TRY 26 Billion 264 Million 712 Thousand. In 2019, SSDF's total revenue was approximately TRY 25.960 Billion, and total expenses were TRY 26.169 Billion. According to SSB data, SSDF's revenues were realized as US$ 12.1 Billion between 2006-2015. As per the research, around 84-86% of military expenditures are met from the Central Budget and approximately 14-16% from the Defense Industry Support Fund (SSDF).

The ratio of the MoND Budget to the General Budget indicates a steady decline over the years. Accordingly, while the ratio of the MoND Budget to the General Budget was 6.9% in 2003 and 5.2% in 2012, it fell to 4.9% in 2019 and 2020 and was calculated as 4.5% in 2021. The share of the 2022 MoND Budget in the proposed 2022 Central Government Budget, at an amount of approximately TRY 1 Quadrillion 751 Billion, is around 4.65%. The share allocated to the MoND Budget ranks 5th among the budgets of other Ministries. The Ministry of Treasury and Finance is in the first place with nearly TRY 775 Billion, the Ministry of National Education is in second place with TRY 189 Billion, the Ministry of Health is in the third place with TRY 116 Billion, and the Ministry of Labor and Social Security is in the fourth place with almost TRY 84 Billion.

In the FY 2022 Central Government Budget proposal, a total of  TRY 193,77 Billion is allocated, the breakdown of which is as follows: TRY 14.734 Billion for the Ministry of Interior (TRY 10.665 Billion in 2021), TRY 3.483 Billion for the National Intelligence Organization (TRY 2 Billion 628 Million 749 Thousand in 2021), TRY 56.996 Billion for the General Directorate of Security (TRY 44 Billion 555 Million 427 Thousand in 2021, TRY 35.996 Billion for the Gendarmerie General Command (TRY 27 Billion 666 Million 860 Thousand in 2021), nearly TRY 1.918 Billion for the Coast Guard Command (approximately TRY 1.471 Billion in 2021), TRY 153.974 Million for the Presidency of Defense Industries (approximately TRY 120.1 Million in 2021), TRY 55.520 Million for the Secretary-General of the National Security Council (around TRY 38.1 Million in 2021)  and TRY 80.439.536 Billion for the Ministry of National Defense  (TRY 61 Billion 484 Million 939 Thousand in 2021).

Therefore, Turkey's Defense and Security Budget planned for 2021 will be TRY 193.77 Billion. This figure was around TRY 129 Billion in 2019. The share of the Defense and Security Budget in the Central Government Budget for 2022 is calculated as 11%.

In the Medium-Term Program (MTP) covering the 2022-2024 period, ratified by the President and published in the Official Gazette (repeated) in September 2021, the US$ exchange rate for 2021 is forecasted as TRY 8.30, in 2022 TRY 9.27, in 2023 TRY 9.77 and 2024 TRY 10.27. As of October 22, 2021, when this article was being prepared, the TRY/US$ exchange rate was TRY 9.61. When calculated as per the average dollar rate of TRY 9.27 for 2022 in the MTP, Turkey's MoND Budget for 2022 is approximately US$ 8.877 Billion, and Defense and Security Budget is nearly US$ 21 Billion.