Erkan Okandan: Budget struggling with rising expenses and debt burden

From January 2024 to August 2025, government expenditures on so-called “transfers of wage nature” increased by 80%. This was reported by former Deputy Minister of Energy and Economy Erkan Okandan, who emphasized that such rapid growth is rare even on a global scale.

According to him, budget revenues are not keeping pace with inflation, while expenditures are growing significantly faster than the economy can compensate. He noted that this leads to an increasing imbalance and adds pressure on public finances.

Okandan also drew attention to the debt burden. According to his data, the Ministry of Finance has taken on obligations of 2 billion Turkish lira, 25 million US dollars, 15 million euros, and 15 million British pounds. Some of this debt is due only on January 9, 2026, but around 5–6 billion Turkish lira must be repaid already in November 2025.

Regarding budget policy, Okandan questioned the realism of claims to achieve a “balanced budget” under current conditions. He noted that the tax system remains a weak link: in 2023, tax revenues were about 20.5% of GDP, nearly half the EU average (around 40%). Furthermore, he said that the tax burden distribution is unfair — indirect taxes are comparable in volume to corporate taxes, creating imbalance and increasing the burden on vulnerable groups.

The situation is exacerbated by the high share of the shadow economy, which Okandan estimated at roughly 80% of total economic activity. He also referenced a poverty index compiled by American economist Steve Hanke, according to which Northern Cyprus ranks among the nine countries with the worst indicators.

In conclusion, Okandan stated that maintaining the Turkish lira as the main currency will make achieving budgetary balance extremely difficult. He emphasized the need to revise currency policy and implement measures to increase revenues, given the country’s high dependence on imports.