The gross debt stock of Turkey's central government moved up by 1% m/m and 19.4% y/y to stand at TRY970bn (€173bn) in June, the Treasury said on July 20.

Annual growth in the government’s gross debt stock declined to 12% in December but it has since been on an escalating path month by month. June's growth was the highest recorded since October 2017.

The gross debt stock was TRY760bn at end-2016 and TRY877bn at end-2017.

The government’s domestic debt stock rose by 0.9% m/m to TRY561bn, while the external debt stock edged up 1.5% m/m to TRY409bn.

Across H1, Turkey’s budget deficit expanded by 83% y/y to TRY46.1bn.

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 is targeting a budget deficit of TRY65.9bn for 2018.

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.

Fitch Ratings on July 13 cut Turkey deeper into junk, downgrading its Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'BB' from 'BB+' with a negative outlook.

Turkey’s public net debt stock rose by 17% y/y and 4% q/q to TRY272bn as of the end of March, the highest level registered since Q2 2012, the Treasury said on June 29.

The public net debt stock remained unchanged at 8.4% of GDP at end-March compared to the end of 2017.

The EU-defined general government debt stock rose by 18% y/y and 5% q/q to reach TRY922bn at the end of March. The EU-defined debt stock to GDP ratio slightly edged up from 28.3% at the end of 2017 to 28.4% the end of March.