Turkey’s budget deficit swells further in November

Budget deficit remains at 5% of GDP as of November, although it is likely to exceed this by end-2024. In November, the central government budget posted a TL16.6bn deficit compared to the TL75.6bn surplus in the same month of last year, while there was a primary surplus of TL129.7bn vs. last year’s TL170.2bn primary surplus. During the January-November period, a budget deficit of TL1.28trl and a primary deficit of TL82bn was recorded compared to TL532bn budget deficit and TL100bn primary surplus figures in the same period of 2023.

 

The 12-month trailing budget deficit stands at TL2.11trl, which was TL1.38trl at end-2023, while the non-interest budget deficit increased from TL700bn to TL882bn during the same period.

The slowdown in tax revenues persists with a YoY deceleration of 17% in real terms (adjusted by CPI inflation), which led to the YoY widening in budget deficit although non-interest expenditures also fell by 5% in YoY terms. The decline in tax revenues is broad based except for domestic VAT collection, which increased by 37% YoY, while corporate tax revenues fell by 53% YoY (both in real terms) partially due to the implementation of the inflation accounting this year.

The widening in interest payments from TL95bn in Nov-23 to TL146bn this year was another factor behind the widening budget deficit.

 

The government had initially projected a budget deficit of TL2.65trl (6.4% of GDP), which was then revised downward to TL2.15trl (4.9% of GDP) in its recent Medium-Term Program (MTP).

Yet, the January-November budgetary results imply that tax revenue and non-tax revenue targets are likely to be missed by a considerable margin (by close to TL0.3-0.4bn). As such, as the unused budgetary allocations are used in the final month of the year, the year-end budget deficit will most likely exceed the MTP target.

 

By Gedik Invest

 

 

Follow our  English language YouTube videos  @ REAL TURKEY:   https://www.youtube.com/channel/UCKpFJB4GFiNkhmpVZQ_d9Rg

And content at Twitter: @AtillaEng

Facebook:  Real Turkey Channel:   https://www.facebook.com/realturkeychannel/

 

 

 

Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.