Türkiye's budget deficit narrows to $41.6B in 2025 amid strong revenue growth

Türkiye's central government budget deficit narrowed to 1.8 trillion Turkish liras ($41.6 billion) in 2025, marking a 14.6% improvement compared to the previous year, according to data released by the Ministry of Treasury and Finance. The reduction was propelled by robust growth in budget revenues, which significantly outpaced the rise in expenditures.

Revenue Growth Outpaces Spending

In 2025, total budget revenues surged by 48% year-on-year to reach $297.1 billion, largely fueled by tax revenues, which accounted for $255.82 billion. Expenditures increased by 35.7% to $338.7 billion over the same period. Non-interest expenditures were recorded at $291.2 billion, while interest payments totaled $47.46 billion. The figures indicate an improving fiscal balance, supported by stronger economic activity and tax collection.

Monthly Data and Exchange Rate Context

In December alone, the budget posted a deficit of $12.2 billion, with revenues of $29.17 billion and expenditures of $41.4 billion. The ministry noted that the average US dollar exchange rate was 40.97 Turkish liras for the full year and 42.7 liras in December, reflecting the currency's volatility and its impact on lira-denominated fiscal metrics.

Economic Implications and Policy Outlook

The narrowing deficit suggests progress in fiscal consolidation efforts amid ongoing challenges related to inflation and currency stability. The revenue-led improvement may provide the government with greater fiscal space to address social and infrastructure priorities while managing debt servicing costs. However, sustained discipline will be required to maintain this trend, especially with continued global economic uncertainties and domestic inflationary pressures.