Türkiye’s budget experienced a significant deficit of 1.37 trillion lira ($45.7 billion) in 2023, marking an increase of 1.22 trillion lira compared to 2022, according to data released by the Ministry of Treasury and Finance.
The budget shortfall surged by 900 percent from 142.7 billion lira in the previous year, Bloomberg reported. Revenues amounted to 5.21 trillion lira, while expenditures reached a total of 6.58 trillion lira.
The substantial deficit can be attributed to a notable increase in the country’s expenditures, which rose from 2.94 trillion lira in December 2022 to 6.58 trillion lira in the corresponding month of 2023. This surge is primarily due to the rise in current transfers, including payments for social aid and to the nation’s state-run energy importer, which increased from 1.12 trillion lira in 2022 to 2.36 trillion lira in 2023.
Read more: Türkiye maintains monetary tightening, raises interest rate to new heights
These allocations increased by 111 percent in annual terms and accounted for more than a third of total spending, as reported by Bloomberg. In December, the budget balance showed a deficit of 842.5 billion lira, following a surplus of 75.6 billion lira in November.
High inflation in 2023
Türkiye experienced an annual inflation rate of nearly 65 percent in the last month of 2023, the highest for that year, and it is expected to reach a peak of 70-75 percent in May. President Recep Tayyip Erdogan’s newly appointed team of economists, known for their market-friendly approach, anticipate a decline in inflation within the next four months, despite the rate briefly receding after reaching a high of 85 percent in October 2022 and then steadily rising again.
The official annual inflation rate for Türkiye rose to 64.77 percent in December 2023, compared to 61.98 percent in November of the same year. Notably, the month-on-month increase of 2.93 percent was the smallest in the last six months.
Türkiye’s economy expanded by 5.9 percent in the third quarter of 2023, driven by household spending. However, economic activity was expected to slow down towards the end of the year due to aggressive monetary tightening measures aimed at cooling demand, according to Reuters. Data from the Turkish Statistical Institute showed that the gross domestic product grew by 0.3 percent from the second quarter of 2023 on a seasonally and calendar-adjusted basis.
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