Turkey's budget deficit balloons in July

Turkey's central government budget recorded a substantial deficit of 378.1 billion lira in July, marking a significant fiscal challenge. The Ministry of Treasury and Finance reported that government expenditures climbed by 59.8% compared to the same month last year, reaching 1.79 trillion lira. Meanwhile, revenues saw a more modest increase of 28.8%, totaling 1.41 trillion lira.

The widening deficit is partly driven by a dramatic surge in interest payments. In July, these payments alone escalated by 142.8% year-on-year, amounting to 326.8 billion lira. For the January-July period, interest expenses have already reached 1.79 trillion lira, a 43.7% increase from the previous year.

Beyond interest, other expenditures also rose. Personnel costs increased by 43.3% to 461.6 billion lira in July, while current transfers grew by 57.2% to 611.5 billion lira. Tax revenues, the primary source of government income, increased by 30% to 1.23 trillion lira in July. However, within tax categories, corporate tax collection saw a sharp decline of 69.8%, contrasting with significant increases in income tax and VAT.