Macro and Politics

* The Treasury recorded a cash surplus of TL247.1 in May, bringing the cumulative cash deficit in the Jan-May period to TL837.4bn. It is worth noting that the sizeable surplus recorded in May was largely driven by a surge in corporate tax revenues, stemming from the structural impact of the removal of the fourth corporate provisional tax payment, which was abolished starting in May 2023. The removal of this instalment has led to a concentration of corporate tax declarations in May, reflecting both the first-quarter provisional taxes for the current year and final corporate tax filings for the previous year’s last quarter. This front-loading effect has significantly inflated revenue figures in May. Hence, we expect next week’s central government budget release to show a substantial rise in corporate tax revenues, likely resulting in a monthly budget surplus exceeding TL200bn. However, we anticipate this temporary revenue boost to fade starting in June, with the budget balance returning to deficit territory in the subsequent month. We forecast the 2025 budget deficit at TL1.9tn, corresponding to 3% of GDP.