Macro and Politics

* The Treasury and Finance Ministry will release July cash budget figures @ 17:30 local time. The Treasury's cash balance posted a surplus of TL50.8bn in June, bringing the cumulative cash deficit to TL1.1tn in the Jan - Jun period. Meanwhile, the central government budget registered a surplus of TL114.2bn in June, while the primary balance recorded a surplus of TL315.8bn. The sharp deterioration in the budget balance observed in May had largely reflected a sharp decline in withholding tax collections and the adverse base effect on corporate tax revenues stemming from the reintroduction of the fourth provisional tax payment last year. With these effects fading in June, together with tax collections postponed to the first week of the month, the budget balance returned to surplus. As a result, the cumulative budget deficit reached TL942.8bn in the Jan - Jun period, corresponding to 34.8% of the government's TL2.7tn full-year budget deficit target for 2026. The rolling 12-month cumulative budget deficit declined to TL1.8tn in June from TL2.2tn in the previous month. Today’s Treasury cash budget data for July will provide an early indication of the July budget figures to be released on August 17. We maintain our 2026 year-end budget deficit forecast at TL2.8tn (3.3% of GDP).

* Foreign investors recorded net sales of $186mn in the equity market during the July 24–31 period, while remaining net buyers in the bond market (excluding repo transactions) with purchases totaling $164mn. This brought to an end the six-week streak of foreign inflows into equities, although inflows had already moderated markedly over the previous four weeks. In the bond market, meanwhile, foreign inflows extended into an eighth consecutive week, reaching a cumulative $4.2bn (excluding repo transactions) over the period. Foreign investors' share in the total government bond stock increased from 7.0% to 7.1% during the week. Over the same period, residents' FX deposits (excluding gold and adjusted for the EUR/USD parity effect) declined by $2.6bn, while their total FX deposits (including gold and adjusted for the price effect), declined by $3.5bn. In terms of official reserves, the CBT's gross FX reserves increased by $1.8bn to $164.5bn, net FX reserves rose by $3.0bn to $54.1bn and net reserves excluding swaps climbed by $2.5bn to $40.7bn during the July 24–31 period.