Türkiye’s March budget deficit lifts Q1 shortfall to $16.6 billion

Türkiye recorded a budget deficit of approximately TL 209 billion ($6.55 billion) in March, as per official data released on Monday, pushing the shortfall for the first quarter to double that of the previous year.

According to the Treasury and Finance Ministry, the budget gap widened from around TL 47.2 billion a year ago and compared to the deficits of TL 153.8 billion in February and TL 150.7 in January.

The shortfall rose 105.4% from January through March from TL 250 billion to TL 513.5 billion, the data showed.

Revenues surged to TL 1.64 trillion in the first quarter, a 130% year-over-year increase, the data showed. Expenditures soared to TL 2.15 trillion, marking a 106% rise from the previous year.

The primary deficit, which excludes interest payments, stood at TL 134.4 billion in March, reaching a total of TL 263 billion for the first quarter.

Interest payments totaled TL 250.4 billion in the first quarter, according to the data.

In March, revenues and expenditures totaled TL 483.8 billion and TL 692.8 billion, respectively.

The budget deficit surged by nearly 864% year-over-year in 2023, reaching $45.5 billion, primarily driven by expenditures related to the devastating earthquakes that struck the southeastern region in February and the presidential and parliamentary elections in May.

In response to the substantial rise in spending, Türkiye implemented measures to boost revenues, including raising taxes on petrol and increasing value-added taxes (VAT) in July.

The government raised corporate taxes on banks, insurers, and capital market institutions, and introduced a temporary motor vehicle tax.

The government anticipates the budget deficit to end 2024 at around TL 2.65 trillion, or 6.4% of gross domestic product (GDP), according to its medium-term program (MTP), unveiled last September.

This contrasts with the 5.4% budget deficit-to-GDP ratio recorded in 2023, below the MTP projection of 6.4%.

From 2013 to 2016, the budget deficit-to-GDP ratio remained around 1%, primarily due to low public debt. However, it increased to 3.5% in 2020 amidst the coronavirus pandemic before dropping to 2.8% in 2021 and falling below 1% in 2022.