1. MEDIUM TERM FINANCIAL PLAN (2011 - 2013) Date : 8/10/2010 Decision No : 2010/28

2. INTRODUCTION I. KEY ECONOMIC INDICATORS AND POLICIES THAT THE CENTRAL GOVERNMENT BUDGET IS BASED ON II. CENTRAL GOVERNMENT BUDGET FIGURES III. CENTRAL GOVERNMENT BUDGET DEFICIT FINANCING IV. THE INSTITUTIONAL BUDGET PROPOSAL CEILINGS AND ISSUES RELATED TO THE BUDGET PROCESS

3. INTRODUCTION Designed to be compatible with the Medium Term Programme. Prepared by the Ministry of Finance and adjudicated upon by the High Planning Council. Aims to raise people's living standards.

4. I. KEY MACRO ECONOMIC INDICATORS AND POLICIES THAT THE CENTRAL GOVERNMENT BUDGET IS BASED ON A. Basic Macroeconomic Indicators B. Basic Policies Regarding Budget Expenditures C. Basic Policies Regarding Budget Revenues

5. A. Basic Macroeconomic Indicators Tablo 1- Basic Macroeconomic Indicators 201120122013 GDP Growth (%)4,555,5 GDP (Billion TL, Current Prices)1.2151.3431.485 GDP (Billion USD, Current Prices)781847913 Year-end CPI (%)5,35,04,9

6. B. Basic Policies Regarding Budget Expenditures Aims to give stability to grow, to increase employment and improve public balances. Budget deficit and debt stock to national income ratio will be reduced. In accordance with the monetary and incomes policy, Fiscal policy will be carried out to ensure the achievement of medium-term fiscal targets regarding budget deficit, the primary balance and revenue –expenditure. During Financial Plan period, more attention will be given to expenditures that support growth and employment and expenditures that reduce regional disparities. In the Medium and long-term more emphasis will be given to infrastructure investments that support economic efficiency and productivity.

7. B. Basic Policies Regarding Budget Expenditures Public investments will be concentrated in the economic and social infrastructure projects mainly in the Southeastern Anatolia Project, Eastern Anatolia Project, Konya Plain Project. During the Financial Plan period food security and sustainable use of natural resources and ensuring the accountability will be respected. Agricultural support so as to secure income and price stability, production efficiency due to differentiated product will be organized. During the period of 2011-2013,under the scope of Public Financial Management and Control Law No. 5018, to improve the administrative capacity of public administration and to fulfill the duties and responsibilities in financial management and control, activities to improve the administrative capacity will be intensified.

8. C. Basic Policies Regarding Budget Revenues The main objective of fiscal policies that will be implemented in the Fiscal Plan ; growth, supporting investment and employment and reducing underground economy For this purpose, stability in the implementation of tax policies and will be predictability in taxation will be the principal. Tax system efficiency will be reviewed, concerning simplicity, of justice in taxation. Battle Strategy Action Plan Against Underground Economiy the will be updated in the light of practical experience.

9. II. CENTRAL GOVERNMENT BUDGET FIGURES A. Central Government Budget Balance Table 2- Central Government Budget Balance and Primary Surplus 201120122013 Central Government Budget Balance (Million TL) -33.493-32.261 -24.359 Central Government Budget Balance/ GDP (%)-2,8-2,4 -1,6 Primary Surplus ( million TL) 14.00720.239 25.641 Primary Surplus ( million TL)/ GDP (%)1,21,5 1,7

10. Table 3- Programme Defined Budget Figures 201120122013 Central Government Budget Primary Expenditures (mioTL) 264.919286.717309.002 Central Gov. Budget Primary Expenditures / GDP (%) 21,821,320,8 Central Government Budget Revenues (Million TL) 265.359292.146321.261 Central Government Budget Revenues / GDP (%) 21,821,721,6 Central Government Primary Balance (Million TL) 4405.42912.259 Central Government Primary Balance / GDP (%) 0,040,400,83

11. B. Central Government Budget Expenditures (Million TL) 201120122013 Central Government Budget Expenditures 312.519339.317359.103 Primary Expenditures 265.019286.817309.102 -Personnel Expenses 72.29978.16484.064 -State Contribution Expenditures to Social Security Agencies 12.73713.74914.662 -Expenditures for goods and services procurement 30.04931.71833.347 -Current Transfers 115.778125.849136.556 - Capital Expenditures 21.63524.27026.804 - Capital Transfers 4.3004.5684.899 - Lending 6.4366.7937.013 -Reserve appropriation 1.7841.7061.757 Interest Expenditures 47.50052.50050.000 Table 4- Central Government Budget Expenditures on the basis of Economic Classification

12. 201120122013 Central Government Budget Expenditures 25,725,324,2 Primary Expenditures 21,821,420,8 -Personnel Expenses 6,05,85,7 -State Contribution Expenditures to Social Security Agencies 1,0 -Expenditures for goods and services procurement 2,52,42,2 -Current Transfers 9,59,49,2 - Capital Expenditures 1,8 - Capital Transfers 0,40,3 - Lending 0,5 -Reserve appropriation 0,1 Interest Expenditures 3,9 3,4 Table 5- Central Government Budget Expenditures to GDP Ratio (%)

13. C. Central Government Budget Revenues (Million TL) 201120122013 Central Government Budget Revenues (Net) 279.026307.056334.743 Central Government Tax Revenues (Net) 232.220255.902281.909 201120122013 Central Government Budget Revenues (net) / GDP (%) 23,022,922,5 Central Government Tax Revenues (net) / GDP (%) 19,1 19,0 Table 7- Central Government Budget Revenues to GDP Ratio (%) Table 6- Central Government Budget Revenues

14. III. CENTRAL GOVERNMENT BUDGET DEFICIT FINANCING Basic Principles of Debt Management * compatible * sustainable * transparent * accountable With the fiscal policy Meet the MOST effective-cost in the medium and long-term

15. III. CENTRAL GOVERNMENT BUDGET DEFICIT FINANCING Strategic Criteria for 2011-2013 Period Liquidity Risk Interest Rate Risk Exchange Rate Risk

16. Table 8- EU defined General Government Nominal Debt Stock / GDP 2011 2012 2013 EU defined General Government Nominal Debt Stock / GDP(%) 40,638,836,8

17. Macroeconomic indicators Medium-term policy priorities set in the program Needs of public administrations Important activities and projects A. Corporate Appropriation Proposal Ceilings IV. ISSUES RELATED TO THE INSTITUTIONAL APPROPRIATIONS PROPOSAL CEILINGS AND BUDGETING PROCESS

18. Budget proposals in a manner consistent with the preparation of a multi-year budgeting approach Conducting a healty relationship during the cooperation and coordination of public authorities Preparing the budget proposals, and sending them to the Ministry of Finance. http://www.bumko.gov.tr/TR/Genel/BelgeGoster.aspx?F6E10F8892433CFFAAF6AA8 49816B2EF592DC0A84F0F0B22 B. Subjects regarding the Budget Process