Turkey’s 2026 Annual Program Reveals SEE Deficit Shrinks

Turkey’s 2026 Presidential Annual Program outlines a cautious improvement in the financial outlook of State-Owned Enterprises (KİT). After recording a massive TL 500.8 billion deficit in 2024, KİTs are expected to narrow this shortfall to TL 244.4 billion in 2025, marking a significant step toward fiscal stabilization. The improvement stems largely from state budget transfers, which have cushioned the losses of major public enterprises through capital injections and subsidy payments.

The report highlights that the balance improvement is mostly due to government funding directed at energy subsidies and strategic state entities such as TCDD (Turkish State Railways), Türkiye Taşkömürü Kurumu (TTK), and TÜRKŞEKER. These transfers include payments under assignment fees for electricity and natural gas subsidies, reflecting the government’s continued effort to manage consumer costs while maintaining public sector stability.

In 2024, KİTs’ value-added contribution to GDP stood at 0.6%, and this ratio is projected to remain unchanged in 2025, signaling a steady but modest role in the national economy. The state-owned enterprise ecosystem currently employs 94,000 people across 19 KİTs, in addition to partially public-owned entities such as Türkiye Denizcilik İşletmeleri (TDİ) and Sümer Holding AŞ, both monitored under the KİT financial balance framework.

According to the program, massive state funding continues to sustain these enterprises. In 2025, the government plans to provide TL 233 billion in capital transfers, TL 421.6 billion in assignment fees, and TL 5.9 billion in public service obligation and subsidy payments. At the same time, investment expenditures across KİTs are forecasted to reach TL 483.1 billion, illustrating the dual approach of fiscal support and infrastructure-driven growth.

However, not all state-owned companies are performing evenly. The tea and sugar sectors—notably ÇAYKUR and TÜRKŞEKER—faced financial challenges despite higher sales prices. ÇAYKUR’s revenues benefited from increased tea prices but were offset by rising raw material and labor costs along with high financing expenses, intensifying the need for additional state capital. TÜRKŞEKER’s sales volume fell short of targets, worsening its financial balance and leading to larger capital transfers from the Treasury.

In contrast, Et ve Süt Kurumu (ESK)—the Meat and Milk Board—posted a remarkable turnaround. Known for long consumer lines seeking affordable meat, ESK is projected to post a TL 14 billion profit in 2025 through its livestock import operations. The institution is also expected to pay TL 5.2 billion in dividends to the Treasury, a rare success story among public enterprises.

Meanwhile, TCDD Taşımacılık AŞ, which operates high-speed and conventional passenger rail services, continues to depend heavily on state assistance. Due to fare adjustments that failed to keep up with cost increases, the enterprise will receive TL 5 billion in public service obligation payments and TL 925.7 million in subsidies for urban rail operations. Additionally, TL 176.1 billion in capital transfers is planned for TCDD this year to finance investments and cover deficits.

The 2026 Annual Program underscores the delicate balance between fiscal consolidation and state intervention. While some KİTs are moving toward financial sustainability, others remain structurally dependent on government support due to social mandates and strategic roles in critical industries like energy, transportation, and agriculture.

The report suggests that further progress will depend on enhancing operational efficiency, reducing financial reliance on the Treasury, and implementing governance reforms across KİTs. Maintaining a sustainable balance between economic efficiency and public service obligations remains a key challenge as the government navigates fiscal discipline and social policy priorities heading into 2026.