Türkiye's central government budget ran a deficit of TL 1.37 trillion (about $45.5 billion) in 2023, according to official data Monday, fueled mainly by expenditures due to devastating earthquakes last February and the May elections.
The gap marked an 863.8% increase from a deficit of TL 142.7 billion in 2022, the Treasury and Finance Ministry data showed. The budget incurred a shortfall of TL 842.53 billion in December, following a TL 75.6 billion surplus in November.
The primary deficit, which excludes interest payments, came in at TL 800 billion in December and amounted to TL 700.4 billion for the entire 2023.
The budget revenues surged by 86.1% in 2023 to TL 5.2 trillion, while expenditures jumped by 123.8%, reaching TL 6.6 trillion.
The data showed that tax revenues increased by 91.2% to TL 4.5 trillion.
Türkiye in July raised taxes on petrol and hiked value-added taxes (VAT) as part of moves to boost revenues after the sharp rise in spending related to the February earthquakes that struck the southeastern region and the May presidential and parliamentary elections.
Although the gross domestic product (GDP) data for the entire 2023 has not been disclosed yet, economists' calculations estimate a year-end budget deficit-to-GDP ratio of 5.4%, as indicated by Vice President Cevdet Yılmaz, attributing it to the increase in revenues.
Treasury and Finance Minister Mehmet Şimşek said the deficit came in approximately TL 258 billion below the expectations outlined in the government's medium-term program (MTP).
"The budget deficit-to-GDP ratio, at 5.4%, is 1 point below the MTP projection of 6.4%," Şimşek told Anadolu Agency (AA). Unveiled in September, the program projects a ratio of 6.4% in 2024 as well, influenced by earthquake-related expenses.
Excluding earthquake spending, the ratio stood at 1.7% in 2023, which Şimşek said is below the Maastricht criteria.
"The budget results affirm our commitment to achieving program goals and reestablishing fiscal discipline," the minister said.
The year-end quake-related expenditures reached TL 950 billion, compared to the anticipated TL 762 billion, Şimşek noted.
"The ratio of earthquake expenditures to the national income is 3.7%," he added.
Haluk Bürümcekçi of Bürümcekçi Consulting said the budget deficit-to-GDP ratio has reached its highest level since 2009, while the primary deficit-to-GDP ratio has reached its highest level since the 2001 crisis.
"The robust domestic demand outlook led to the budget deficit remaining below the MTP estimates, as tax revenues significantly exceeded targets," Bürümcekçi said.
The budget deficit-to-GDP ratio remained around 1% from 2013 to 2016. Low public debt during this period was a crucial factor supporting the Turkish markets.
The gap rose to 3.5% in 2020 amid the coronavirus pandemic and dropped to 2.8% in 2021 before falling to below 1% in 2022.
An additional budget of TL 1.1 trillion was allocated last year for increased expenditures due to the elections and the earthquakes. It was accompanied by various additional taxes. The government raised corporate tax on banks, insurers and capital market institutions and unveiled a temporary motor vehicle tax.
Both Şimşek and Yılmaz attributed the better-than-expected outlook to a higher-than-anticipated revenue increase.
"Effective tax audits nationwide, a robust fight against the informal economy, and efforts to accelerate collection have been decisive factors in this increase in revenue performance," Şimşek said.
Despite allocating more resources for earthquake-related needs, the minister said a disciplined approach has been maintained in line with the MTP.
"As for the non-earthquake expenditures, an approach in line with fiscal discipline has been adopted, addressing priority needs and not creating any additional burden for the coming years," Şimşek said.