VKF_FRAE_2018_uyg11

VakıfBank Annual Report 2018 31 months of 2018, VAT and SCT were reduced in the housing, furniture, white goods and automotive sectors. These incentives, which were designed to boost growth and the real sector, led to an increase in the budget deficit in 2018. However, the rise in the deficit was limited by an increase in non-tax revenues. As a result, the budget deficit for 2018 came in at TL 72.6 billion, in line with the NEP target of TL 72.1 billion. The budget deficit to GDP ratio was 1.9% in line with the NEP target; thus, fiscal discipline was maintained. In 2018, tax revenues rose 15.8% compare to the previous year while non-tax revenues jumped 52.9%. Non-interest budget expenditure was up by 21.7% while interest expenditure increased 30.4%. The hike in interest rates in the second half of 2018 brought about an increase in interest expenditure. In 2019, the ratio of the budget deficit to GDP is expected to decline to 1.8% as foreseen in NEP. Inflation closed the year at 20.30%. After ending 2017 at 11.9%, inflation peaked at 25.24% in August 2018 due to the sharp rise in the foreign exchange rate. Subsequently, inflation started to cool as Fiscal discipline was maintained as the budget deficit to GDP ratio came in at 1.9%, in line with the target in the New Economy Program. Source: Turkish Statistical Institute Change in Inflation (%) 20 30 40 50 10 0 09/14 06/14 03/14 12/13 09/13 06/13 03/13 12/14 03/15 06/15 09/15 12/15 03/16 06/16 09/16 12/16 03/17 06/17 09/17 12/17 03/18 06/18 09/18 12/18 Domestic CPI (%, y-y) CPI (%, y-y) Core CPI (%, y-y)