Interest hit the Treasury on May 3!

The Ministry of Finance and Treasury has released the budget data for the month of May today. Although the budget had a surplus with the deferred corporate tax payments made in May, there was a notable figure in budgetary expenses.

Interest expense in the budget broke the all-time monthly record with TL 102.7 billion in May.

In fact, the interest expense was TL 34.5 billion in April and TL 17.9 billion in May last year.

Thus, Nurettin Nebati signed a record payment of interest in his last month as Minister of Finance and Finance.

WHAT IS THE REASON FOR REGISTRATION IN INTEREST?

Although the Central Bank Policy Rate (CBRT) is 8.5 percent, there is a very different picture in Treasury interest payments.

As CBRT interest rate policy blew up inflation along with exchange rates, very high numbers emerge in Treasury redemptions on inflation-linked bonds held by banks.

Like the interest payment of TL 61.1 billion in October 2022, the repayment of the Consumer Inflation-Indexed Bond was made in payment in May 2023.

In the bond code TRT030523T13, which was issued in 2013 and paid on May 3, approximately TL 67 billion of a debt of TL 15.3 billion was paid. In fact, public deposits in the CBRT were reduced by about TL 67 billion at that time.

In October 2022, a repayment of approximately TL 40 billion was made for a debt of TL 8 billion.

Inflation-indexed bonds have also weighed in on banks’ high profits in the recent period.

INTEREST BILL OF 2.9 BILLION TL

Although the Treasury has recently suppressed long-term bond rates with Central Bank regulations, it will make high interest payments in the coming years with the effect of inflation-indexed bonds.

In May 2023, the total stock of internal Treasury debt was at the level of TL 2.3 trillion, while the amount of interest to be paid on this debt in the future exceeded TL 2.9 trillion. This figure, which was TL 699 billion in August 2021, doubled with rising exchange rates and inflation.