Turkey’s central government debt edges down in August

By bne IntelliNews September 21, 2016

Turkey’s central government gross debt stock edged down 0.2% m/m to TRY711bn (€214bn) as of the end of August, the country’s Treasury said on September 20. Debt stock was TRY678bn at the end of last year.

The main concern, however, is not the rising public debt but the fast expansion of the private sector's external debt. Leverage in the corporate sector has risen rapidly especially after the global financial crisis as the world’s major central banks pumped billions of US dollars into the system, making it easier for Turkish banks and firms to reach low-cost foreign funding.

The Treasury also said that domestic debt stock rose by 0.7% m/m to TRY458bn at the end of August, while external debt stock decreased by 1.7% m/m to TRY253bn.

Fitch Ratings announced on August 19 that it has affirmed Turkey's long-term foreign and local currency issuer default ratings (IDR) at 'BBB-', the lowest investment grade, but it downgraded the outlook to negative from stable.

Prolonged or deepened political instability, insecurity or geopolitical stresses that undermine economic performance or economic policy credibility; a materialisation of stresses stemming from external financing vulnerabilities, a reversal in the declining trend in debt to GDP ratio or a worsening of external imbalances could individually or collectively trigger a rating downgrade, Fitch warned.

Turkish Central Government Debt Stock
($ mn) Domestic Foreign Total
Jan  416,933      204,559      621,493    
Feb  421,204      211,547      632,751    
Mar  423,184      210,666      633,850    
Apr  428,485      219,649      648,134    
May  429,378      218,061      647,439    
Jun  430,236      221,911      652,147    
Jul  434,383      227,897      662,279    
Aug  434,981      241,715      676,696    
Sep  438,175      252,522      690,696    
Oct  438,204      239,957      678,161    
Nov  439,458      237,367      676,825    
Dec-15  440,124      237,565      677,689    
Jan-16  443,078      241,707      684,785    
Feb  444,085      241,146      685,231    
Mar  448,233      235,593      683,826    
Apr  449,407      233,668      683,075    
May  452,286      248,505      700,791    
Jun  453,269      247,035      700,303    
Jul  455,309      256,829      712,138    
Aug  458,414      252,533      710,948    
source: treasury
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