Aerospace & Defense Industry: Turkey’s SSB Launched Report on Corporate Financial Standing and Expectations for the Year 2021

Turkish Presidency of Defense Industries ("SSB") has launched the Corporate Financial Stating and Expectations Report for the Year 2021 (“Report”) on 20 July 2021., It is stated in the Report that the budget proposal has been prepared within the limits of budget ceiling and has been finalized pursuant to 2021 Central Government Budget Law. The report also includes budget revenues, expenditures and financings realized and targeted to be realized in 2021.

Budget Execution Results for January-June 2021 Period

As per the Report, when the realizations of the first six months of 2021 are analyzed, there has been an increase of 14% in personnel expenses and state contributions to social security institutions compared to the same period of 2020. In addition, in the Report, it was evaluated that while there was an increase of 39% in current transfers compared to the same period of the previous year, there was a decrease of 12% in the purchase of goods and services compared to the same period of 2020. Further, it was stated that capital expenses decreased in 2021.

In the Report, regarding the budget revenues, it is expressed that most of the budget revenues are covered by the resources transferred by Defense Industry Support Fund ("SSDF"), while the remaining portion is obtained from participation interest, rental income and other incomes.

In terms of financing, the Report mentions that SSB’s financing is almost entirely composed of shares transferred from SSDF. For according to the Financial Management and Control Law No.5018, SSB is specified budget institution that does not receive treasury grants, and in accordance with Law No.3238, SSB’s budget cannot exceed 2% of SSDF’s income.

Activities Conducted in January-June 2021 Period

In the Report, it was mentioned that the projects carried out by SSB were realized with SSDF resources and/or budget transfers of the relevant institutions, and it was stated that the expenditures made from the special budget of the SSB were administrative expenditures.

Additionally, the Report highlights the purpose of establishment of the SSB that is to satisfy needs of Turkish Armed Forces, Turkish Ministry of Interior, the Presidency of National Intelligence Services and other public institutions on system and modernization requirements and to develop the domestic defense industry.

Expectations and Targets for Period of July-December 2021

Finally, in addition to the expenditure made in the first six months of 2021, it is estimated that approximately TRY 72 mio of appropriation will be used until the end of the year. In this context, it has been stated that the necessary resources for the SSB's budget will be met by transferring them from SSDF.

Şafak Herdem, Meryem Özbek