The Turkish parliament has approved the central budget for 2026. The budget provides for total expenditures of around 19 trillion Turkish lira—an increase of 28 percent compared to the previous year. Despite official inflation forecasts of 16 percent, this represents a real increase in government spending. The debate focused on rising interest payments, the ongoing budget deficit, and the structural burden of debt financing. A total of 320 members of parliament voted in favor of the draft budget, while 249 voted against it. The final report on the 2024 fiscal year was also approved by a narrow majority.
Interest rates dominate financial planning
The growing share of interest expenditure is particularly striking. Around 2.7 trillion lira is earmarked for debt servicing in 2026 – around 40 percent more than in the previous year. This means that around one in five lira from tax revenues goes directly to interest payments. These are to be covered entirely by new debt, which increases structural dependence on the capital market. Excluding interest, the remaining expenditure amounts to around 16.2 trillion lira. This corresponds to a daily government expenditure volume of around 44 billion lira.
Stable revenue structure with regressive effect
Planned tax revenues amount to 13.8 trillion lira, exceeding the previous year’s level by 23 percent. Two-thirds of this will continue to come from indirect taxes such as value added tax and special consumption tax. The tax burden will therefore mainly affect private households and consumers. Wage earners remain the main source of direct revenue through income tax, while companies contribute comparatively little to tax revenue.
Deficit and debt continue to rise
The projected budget deficit is 2.7 trillion lira—an increase of around 40 percent compared to 2025. The so-called primary balance, i.e., the result excluding interest payments, is approaching zero. This increases the structural vulnerability of the budget to interest rate rises and external financing risks.
The central government’s debt now stands at around 13 trillion lira – equivalent to approximately 153,000 lira per capita. This amount has increased more than thirteenfold within seven years. The average interest rate on domestic bonds was 39 percent in the first nine months of 2025 – a figure reminiscent of the aftermath of the 2001 financial crisis.
Largest individual budgets for finance, education, and health
By far the largest budget in 2026 will go to the Ministry of Finance and Treasury, with 8.84 trillion lira, followed by the Ministry of Education (1.94 trillion lira) and the Ministry of Health (1.47 trillion lira). The defense budget is around 823 billion lira, while that of the Ministry of the Interior is 120 billion lira.
Political tensions in parliament
The vote late on Sunday evening was accompanied by heated exchanges and scuffles between members of the ruling AKP party and the opposition CHP. The trigger was historical statements about the single-party era in the early republic and attacks on the political legacy of Mustafa Kemal Atatürk. The session had to be interrupted after a physical altercation broke out in the plenary chamber.