Macro and Politics
Tacirler Investment
* The Treasury and Finance Ministry will release November cash budget figures @ 17:30 local time. The Treasury’s cash budget registered a deficit of TL167.3bn as of October, while the primary balance posted a deficit of TL41.4bn. The central government budget, on the other hand, posted a deficit of TL186.3bn in October, higher than the cash deficit, while the primary balance recorded a deficit of TL50bn in the same period. A palpable divergence has emerged between the accrual-based budget and the cash budget since the beginning of 2024 and we expect the deterioration in cash budget to sustain in the coming period. We observe that the TL1.3tn earmarked for earthquake-related expenditures in 2024 has not yet been fully absorbed into the budget. The overwhelming majority of these expenditures are reflected in the three sub-categories under the Ekod4 classification, which enables us to monitor the expenditure trajectory. Accordingly, similarly to last year, we anticipate a significant widening of the budget deficit in December of this year, driven by the accrual of earthquake-related spending in the final month. We maintain our year-end budget deficit/GDP forecast at 4.3%.
* The foreign investors were the net buyers on both the equity and bond markets, albeit modestly, in the week of November 22 – 29. Accordingly, the equity and the bond market (excluding repo transactions) experienced a net foreign inflow of USD280mn and USD610.2mn, respectively. Besides, the foreigners’ share in total bond stock remained unchanged at 7.6%. Moreover, the residents’ FX deposits slid merely by USD93mn (gold accounts excluded, EUR/USD parity adjusted), while total FX deposits (including gold, price adjusted) decreased by USD538mn in the week of November 22 – 29. Regarding international reserves, the CBRT’s gross FX reserves rose by USD1.1bn to USD157.9bn and net international reserves climbed by USD3.3bn to USD64.1bn. Net reserves excluding swaps, moreover, increased by USD4bn to USD45.6bn.