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
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