Türkiye’s current account deficit widened more than expected in April, official data showed Monday, as the imbalance poses one of the most significant challenges for the newly elected government.

The shortfall reached $5.4 billion (TL 127.36 billion) in April, the Central Bank of the Republic of Türkiye (CBRT) said, up from a revised $4.9 billion in March, marking an 18th straight month of deficits.

Surveys had expected the gap to come in at some $4.5 billion.

The deficit lifted the shortfall between January and April to $29.7 billion, the data showed. The 12-month rolling gap reached $57.8 billion, marking the highest level since July 2012.

Excluding gold and energy, the current account saw a net deficit of $480 million in April, the central bank said.

The goods deficit was $7 billion, while services recorded a net surplus of $2.9 billion. Under services, travel items saw a net inflow of $2.2 billion in April.

Direct investment posted a net inflow of $784 million in the month. The data also showed official reserves dropped $8.2 billion, taking the total fall in the first four months to $22.4 billion.

Ankara expects a deficit of $22 billion this year, according to official forecasts announced in September, more than halving from last year's $48.8 billion, which was largely driven by energy and gold.

The government has pursued an economic policy centered around lower interest rates for years, aiming to eventually flip Türkiye’s chronic current account deficits to a surplus, which the central bank had said will establish price stability.

After being elected to his third term last month, President Recep Tayyip Erdoğan named Mehmet Şimşek, a former deputy prime minister who is well regarded by foreign investors, as treasury and finance minister.

Şimşek later said the country needed to return to "rational" ground, raising expectations that the government could overhaul its economic policies with eventual rate hikes.

Erdoğan on Friday appointed Hafize Gaye Erkan, previously a U.S.-based finance executive, to head the central bank.

The Turkish lira slipped to a new record low on Monday, as investors waited for indications on policy moves after Erkan’s appointment. The bank is due to hold its first monetary policy committee meeting under Erkan on June 22.

Her predecessor Şahap Kavcıoğlu spearheaded the easing drive that saw the central bank slashing its benchmark policy rate to 8.5% from 19% in 2021.

The lira was 1.3% weaker at 23.65 against the dollar at 8:34 a.m. GMT, after hitting a record low of 23.77 overnight. It has weakened more than 21% this year.

JPMorgan said on Monday it expects the bank to hike interest rates to up to 25% at its June meeting, adding this could come with forward guidance suggesting smaller hikes ahead if needed.

Markets are now watching to see what other personnel changes will be made in the central bank's monetary policy committee, regulatory bodies, state banks and the Türkiye Wealth Fund.

Şimşek is expected to meet the heads of Turkish banks around the end of this week.