(Bloomberg) -- The Turkish government just hit the jackpot.
Profit at the nation’s central bank will triple to around 65 billion liras ($12.2 billion) in 2018, according to Bloomberg calculations based on historical data and expected dividend payments. That brings the amount of cash the Turkish Treasury -- its largest shareholder -- stands to receive to around 46 billion liras.
The windfall comes after the central bank on Friday approved a request from the fiscal authority to receive 90 percent of its share of the profits in January, earlier than usual. The move is likely designed to boost the government’s coffers as it cuts taxes and puts a lid on local-currency borrowing to keep interest rates in check before municipal elections in March.
“How the government will use this money is important,” Haluk Burumcekci, founder of Istanbul-based independent research firm Burumcekci Research and Consulting, said by phone. “They may use this money to borrow less, or they may keep the borrowing at the same level and spend more ahead of the election, which would add pressure on the budget gap.”
The cash influx includes 9 billion to 10 billion liras of tax payments already paid to the treasury, according to Bloomberg calculations. The government will use the proceeds to improve the “liquidity flow” to markets through investments, tax rebates and other payments to businesses, Treasury and Finance Minister Berat Albayrak said on January 9.
Turkey’s budget deficit will widen to 3.1 percent of output in 2019, according to the median estimate in a Bloomberg survey. That’s the highest in at least nine years, the fallout from last year’s currency crash. The government forecasts a budget deficit of 1.8 percent of gross domestic product for the year.