Spending Targets and Budget Increases in the Medium-Term Program

The high-rate increases observed in the budget items within the scope of the recently announced Medium-Term Program have caused spending targets to exceed inflation expectations, bringing about various debates.

Early Election Debates and MTP Signals

Measures that could lead to the loosening of tight monetary policy and President Recep Tayyip Erdoğan's expression of hope for success in the upcoming election have fueled early election claims. It was stated that the Medium-Term Program announced last week contains significant signs that preparations for elections will begin.

Increases in Capital and Current Transfer Items

A massive increase of 130 percent is projected in the capital transfer item within the central government budget. This item, expected to finish 2026 at 325 billion liras, is planned to rise to 750 billion liras next year.

The current transfer item, on the other hand, will increase by 45.3 percent to reach 10 trillion 240 billion liras next year. Furthermore, Vice President Yılmaz announced that a 43 percent increase in health expenditures and a 150 percent increase in social housing expenditures are projected.

Reserve Appropriations and Non-Interest Expenditures

While the increase rate in the capital expenditures item directly carried out by the state remains at 3.8 percent, a 44.4 percent increase is projected in the goods and services procurement item. In the program where the amount of reserve appropriations has been increased, non-interest expenditures in the 2027 budget are expected to increase by 38.3 percent to reach 23 trillion 298 billion liras. Interest expenditures are targeted to rise by 40.7 percent to 3 trillion 975 billion liras.

Agricultural Subsidies and Retirement Pension Studies

Within the scope of agricultural subsidies, crop production subsidies were increased by 50.4 percent for 2026. Ovine and bovine livestock subsidies showed an increase of 43 percent.

Minister of Treasury and Finance Mehmet Şimşek announced that a new study based on the principle of guaranteeing a specific income, such as family income insurance, has been initiated regarding the lowest retirement pensions.