The Turkish government’s budget deficit grew by 89% y/y to TRY25.6bn (€4.52mn) in June, data from the finance ministry showed on July 16.

Across H1, it expanded by 83% y/y to TRY46.1bn while the central government budget produced a primary deficit of TRY12.3bn versus a primary surplus of TRY1.8bn in the first half of 2017.

Expenditures rose by 23% y/y to TRY400bn in the first half while revenues rose 18% y/y to TRY354bn.

The government's tax revenues rose by 20% y/y to TRY295bn in January-June.

The government is targeting a budget deficit of TRY65.9bn and a primary surplus of TRY5.78bn for 2018.

For the full year of 2017, the central government budget balance showed a deficit of TRY47.4bn, below expectations at around 1.5% of GDP.

Under Turkey’s medium-term economic programme, the targets for the budget deficit/GDP ratio are 1.9% for both 2018 and 2019 and 1.6% in 2020.

The government’s budget was stretched by a set of economic stimulus measures brought in during the build-up to the April 2017 referendum, which officially resulted in a Yes vote for a now-in-place executive presidency, while the election stimulus expanded into 2018 in the build-up to the June 24 snap polls, which officially resulted in a landslide victory for Turkish President Recep Tayyip Erdogan.

On May 1, the Turkish government announced election incentives for 12mn retirees that will cost TRY22-24bn by year-end.

New tax measures announced in September will add TRY27bn-28bn to budget revenue in 2018, according to former Finance Minister Naci Agbal.

Turkey plans to earmark up to TRY18bn for additional defence spending in 2018 with the extra costs to be met mainly from tax income rather than borrowing, former Deputy PM Mehmet Simsek said in October.