Macro and Politics
Tacirler Investment
* The Treasury will hold 2y fixed coupon and 6y FRN bond auctions today. The Treasury tapped the domestic markets to the tune of TL78.4bn so far this month. After today’s double auction, the Treasury will hold 3y CPI-indexed and 10y fixed coupon bond auctions as well as the direct sale of 2y lease certificate tomorrow and finalize its domestic borrowing program for December. According to three-month (Dec 24 – Feb 25) domestic borrowing strategy, the Treasury has a total domestic redemption of TL71.5bn in December, while in return plans to borrow TL132bn throughout the month, indicating a roll-over ratio of 185%. Hence, as per the domestic borrowing strategy, the Treasury is likely to borrow around TL55bn from the domestic markets this week.
* The Treasury and Finance Ministry will release November central government budget figures @ 11:00 local time. Recent data indicates a budget deficit of TL1.3tn and a primary deficit of TL211.4bn for the Jan – Oct period. Over the same period, the cash balance recorded a deficit of TL1.7tn, reflecting a persistent divergence between accrual-based and cash budget outcomes since the beginning of 2024. While cash-based performance is likely to remain weak, we foresee non-tax revenues and interest expenditures emerging as the key drivers of fiscal performance in the months ahead. The cumulative budget deficit so far remains well below the projections set out in the Medium-Term Economic Program (MTEP). However, with a significant portion of the planned TL1tn in earthquake-related expenditures expected to be accrued in the final months, we anticipate the deficit converging more closely with MTEP forecasts. Accordingly, much like last year, we foresee a notable widening of the budget deficit in December. We expect the budget deficit to reach TL1.86tn (4.3% of GDP) in 2024.