TRNC Central Bank Reports Economic Growth Amid Rising Budget Deficit

According to the bulletin, the total assets of the banking sector grew by 9.04% in the last quarter, reaching 329.5 billion TL by the end of December 2024. Gross loans stood at 130.9 billion TL, while total deposits reached 256.3 billion TL.

Gross loans accounted for 39.74% of total assets, followed by cash and cash equivalents (34.98%), MDC (16.61%), and other assets (8.66%). Compared to the same period in 2023, gross loans increased by 42.27%.

In terms of liabilities, deposits represented 77.8% of the total, while equity accounted for 10.32%, bank borrowings 5.95%, and other liabilities 5.93%.

Business loans remained the largest category at 88.8 billion TL, followed by consumer loans at 22 billion TL. Deposits in Turkish lira increased by 21.3% in the last quarter to 63 billion TL, while foreign currency deposits rose by 2.42% to 193.3 billion TL. The loan-to-deposit ratio was 64.42% for Turkish lira deposits and 44.45% for foreign currency deposits.

The sector's total equity rose by 102.15% year-on-year, reaching 34 billion TL in the fourth quarter of 2024.

PASSENGER TRAFFIC INCREASES

The number of passengers arriving in the TRNC by air and sea increased by 19.1% in 2024 compared to 2023, reaching 2.2 million. Monthly arrivals in the last quarter were recorded as 215,712 in October, 207,448 in November, and 197,391 in December.

At border crossings, 2.8 million crossings were made by Greek Cypriots, while non-Cypriot nationals recorded 1.99 million crossings. Meanwhile, TRNC citizens made 2.96 million crossings, a 17.9% increase compared to 2023.

INFLATION DEVELOPMENTS

In the fourth quarter of 2024, monthly inflation rates were 3.22% in October, 0.78% in November, and 1.10% in December.

Annual inflation rates, compared to the same months in 2023, declined to 65.65% in October, 59.88% in November, and 53.29% in December.

The highest annual price increases were recorded in:

• Education (99.32%)
• Miscellaneous goods and services (81.36%)
• Clothing and footwear (76.79%)
• Healthcare (73.13%)

The lowest price increase was in the transportation sector, which saw a 24.84% rise.

RISE IN REGISTERED EMPLOYMENT

The number of employees registered with social security increased from 141,441 in November 2023 to 159,321 in October 2024.

During this period, the number of foreign workers with work permits grew by 30.27%, from 63,537 to 82,771.

As of October 2024, 48.1% of registered employees were TRNC citizens, 27.7% were Turkish nationals, and 24.2% were from other countries. For the first time, the number of work-permit holders surpassed the number of TRNC citizen employees.

BUDGET DEFICIT SURGES

In the 2024 fiscal year, budget revenues amounted to 75.6 billion TL, while expenditures reached 85.2 billion TL, resulting in a deficit of 9.6 billion TL—up significantly from 263 million TL in 2023.

The ratio of domestic revenues (excluding aid and loans from Turkey) to budget expenditures dropped from 85.7% in 2023 to 74.1% in 2024. Meanwhile, Turkey’s financial support increased, with its share of total revenue rising from 15.9% in 2023 to 19.7% in 2024.

To finance the deficit, the government issued 3.05 billion TL in domestic bonds while repaying 2.96 billion TL, resulting in a net borrowing of 95.2 million TL. By the end of the fourth quarter, total domestic debt had surged from 786.2 million TL at the end of 2023 to 6.08 billion TL—a one-year increase of 5.29 billion TL.