Macro and Politics

* The CBT will release weekly foreign portfolio flows, money & banking statistics, and international reserves for the period of April 25 – May 2 @ 14:30 local time. Based on our calculations upon the CBT’s analytical balance sheet, we estimate that during the week of April 25 – May 2, the net international reserves dropped further by USD2.1bn to USD33bn and the gross FX reserves slumped by USD2.5bn to USD138.7bn. We anticipate that today’s official reserve data will likely reflect a similar trend in line with our calculations. To recall the data from the previous week: The equity and the bond market (excluding repo transactions) experienced a net foreign inflow of USD92.4mn and USD476.7mn, respectively, while the foreigners’ share in total bond stock dropped barely from 4.8% to 4.7% in the week of April 18 – 25. Besides, during the same period, the residents’ FX deposits slid by USD287mn (excluding gold accounts and adjusted for the EUR/USD parity effect), while their total FX deposits (including gold, price adjusted) retreated by a mere USD147mn. Moreover, the CBT’s gross FX reserves eased by USD5.5bn to USD141.2bn, while the international reserves decreased by USD3.6bn to USD35bn.

* The Treasury and Finance Ministry will release April cash budget figures @ 17:30 local time. In March, the Treasury recorded a cash deficit of TL298.4bn, bringing the cumulative cash deficit in the first quarter to a hefty amount of TL901bn. Moreover, the primary balance posted a deficit of TL162.9bn in March, while the cumulative primary deficit for the first three months amounted to TL483.7bn. The persistent divergence between the accrual-based and cash-based budget frameworks remains notable. The substantial 1Q25 cash deficit of TL901bn underscores that elevated public expenditure continues to pose risks to the disinflation outlook. Given that more than a third of the annual deficit projection has materialized within the first three months of the year, we believe that achieving fiscal consolidation in the remainder of the year will be critical to restoring a healthier balance between inflation and growth dynamics.