Turkey is preparing to raise its debt limit for the first time since 2009 after first-half borrowing left the Treasury near its legal ceiling, Bloomberg reported on July 25.

Citing a person with direct knowledge of the plans to change the law for 2017 debt by the end of the year, it noted that the Treasury’s debt limit can be hiked by 10% with government approval but that any increase above that requires a change in the law. 

Turkish public finance laws currently allow the government to borrow around TRY47.5bn ($13.3bn) net this year, according to calculations by economists Haluk Burumcekci, founder of Burumcekci Research & Consulting, and former Treasury undersecretary Mahfi Egilmez, the news service said.

After the report, Turkey’s bonds extended their decline. The yield on the 10-year lira note climbed 11 basis points before steadying at 6 basis points as of 15:00 Istanbul time.

Turkey is experiencing a government-fuelled credit boom with ministers looking to boost lending to restore momentum to an economy that lost steam after last year’s attempted coup. Some analysts say it has fed through into the gravity-defying performance of the Turkish stock market.

Tax breaks and a TL250bn ($70bn) state-backed credit guarantee fund (CGF) have helped open the credit taps. This has led to anxieties among analysts. Renaissance Capital back on June 12 stated: “Our constructive view on Turkey is only tactical... We emphasised [in May 2015] that excessive credit growth is Turkey’s key macro vulnerability. Private sector debt rose from 16% of GDP in 2001 to 69% of GDP in 2016, echoing what we have seen in Greece and Brazil. This is likely to end badly, in our view, just not yet.”

The Turkish government’s net borrowing in the first half of this year reached TRY46.5bn, including TRY26.7bn sourced domestically and the equivalent of TRY19.8bn liras abroad. Turkey’s year-to-date debt rollover ratio is 114%, on pace to be the highest on record in a Treasury data set going back 2003, according to Bloomberg.

Turkey last increased its debt limit five-fold in 2009. That came after the onset of the global financial crisis, which pushed Turkey into recession.