Turkey’s cash budget ran a deficit of TRY21bn (€5.6bn) in December, marking a significant increase of 158% y/y compared to the TRY8bn recorded in December 2016, treasury data showed on January 8.

The primary cash budget produced a primary deficit of TRY21bn in December, 234% y/y up from TRY6bn in December 2016.

Across 2017, the cash deficit rose by 58% y/y to TRY60.5bn while the primary deficit rose by 239% y/y to TRY18bn.

The finance ministry will release the 2017 budget figures on January 15.

Turkey’s budget deficit widened 25% to TRY29.3bn in 2016.  The government’s central budget shortfall estimate for 2017 is 2% of GDP, or TRY61.7bn, according to the latest Medium Term Programme unveiled on September 27.

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 an executive presidency. 

In September, the government introduced hikes in a number of taxes, including a 2 percentage-point increase in the financial sector’s corporate tax rate to 22%. It also raised the motor vehicle tax on passenger cars by 40%.

New tax measures announced on September 27 within the three-year economic programme will add TRY 27-28bn to budget revenue next year, according to Finance Minister Naci Agbal.

Turkey plans to earmark up to TRY18bn for additional defence spending next year with the extra costs to be met mainly from tax income rather than borrowing, Deputy PM Mehmet Simsek said on October 5.

Simsek also said that changes to the income tax regime would be introduced in the first half of 2017.

The new economic programme foresees tax revenues rising from TRY535bn in 2016 to TRY614bn in 2017.