EARTHQUAKE TO PLACE USD 10BN BURDEN ON 2023 BUDGET

Studies on the economic impact of earthquakes, which affected 10 provinces of Turkey and caused great destruction, are just beginning. Although the exact data on the earthquake has not yet been revealed, the basic information about the destroyed assets has been revealed. Non-governmental economic institutions and scientists will also carry out various studies on the data. International organizations such as the United Nations Development Program (UNDP) are also working on a study, according to international media.

Based on the latest data, daily EKONOMI calculated the economic debris caused by twin quakes, the possible effects of the earthquake’s destruction on the budget, as well as on the national income through the public channel. Authorities underline that it is not yet clear what kind of a model the investments to be made to eliminate the effects of the disaster, will be implemented.

Apart from the current resources and the private sector’s spending, the additional financial resource to be allocated from the 2023 budget for expenditures to meet the loss of earthquakes will reach TRY 180200bn, according to specialists. The figure corresponds to 1.5% of the country’s gross domestic product (GDP). Specialists stated that there is a room from the public finance perspective in terms of the budget deficit, and the ratio of the public debt to the national income, the adverse impact of the ‘cost’ on the budget and the national income will continue over the years.

Turkey’s GDP is expected to increase by around 4% in 2022. It seems possible to reach a level above TRY 15tr with the effect of inflation under current conditions. In this case, the additional burden on the budget from the current foreign exchange rate will be between USD 8bn to USD 10bn in the negative scenario for 2023.