Turkey’s gross external debt stock rose by 1.8% q/q and 0.6% y/y to $412bn by the end of March, the treasury said on June 30.

Heavy dependence on external borrowing is a sharp reality in Turkey due to the country's chronic current account deficit. Debt-financed consumption was the prime feature of the remarkable economic growth achieved by Turkey during much of the past decade, while the private sector’s share in total external borrowing has been on the rise in recent years. 

Despite the relatively limited expansion recorded in the first quarter of 2017, the Q1 gross debt stock was lower than Q3 2016’s $414bn and Q2 2016’s record high of $419bn. The gross debt stock rose by 2.3% y/y to $405bn at the end of 2016 from $396bn at the end of 2015.

The private sector's share in the country’s total gross external debt stood at 70% or $289bn at the end of Q1, representing a 1.5% q/q rise from $284bn at the end of 2016 and a 0.4% y/y decline from $290bn at the end of the first quarter of 2016. The share of the public sector stood at 30% or $123bn at the end of Q1, corresponding to a 2.6% q/q increase from $120bn at the end of 2016 and a 3.7% y/y rise from $118.5bn at the end of the first quarter of 2016.

Turkey’s gross external debt stock corresponded to 49.1% of GDP at the end of Q1, the highest level recorded since Q2 2003’s 52.4%. The gross external debt stock to GDP ratio stood at 47.3% at the end of 2016, up from 46% at the end of 2015.

Turkey's net external debt stock also increased in the first quarter, rising by 5% q/q and 4% y/y to a record high of $267bn as of the end of March, the treasury said on June 30 in a separate statement. 

The net external debt stock rose by 0.3% y/y to $253bn at the end of 2016 from $252bn at the end of 2015.

Also, the net external debt stock to GDP ratio rose to 31.7% at end the end of Q1, the highest level recorded since Q3 2003’s 32%.

The net external debt stock stood at 29.5% at the end of 2016, slightly up from 29.3% at the end of 2015.

Turkey’s short-term external debt stock rose by 3% m/m to $105.3bn at the end of April from $102.2bn at the end of March. The Turkish private sector’s long-term foreign debt rose 0.93% m/m to stand at $205bn as of end-April from $203.1bn at end-March.