Turkey’s short-term external debt stock moved up by 14% y/y to $122bn at the end of March, the highest level recorded since June 2015, the country's central bank said on May 18.

External debt maturing within one year or less regardless of the original maturity stood at $181.8bn as of end-Q1.

The short-term external debt stock grew by 16% y/y to $118bn at the end of 2017 from $101.5bn at the end of 2016.

Turkey is heavily dependent on external borrowing due to its chronic current account deficit. Debt-financed consumption has been the prime feature of the country’s remarkable economic growth achieved during much of the past decade, while the private sector’s share in total external borrowing has been on the rise in recent years.  

Ukraine and Turkey are two of the “vulnerable three" countries most at risk to US tightening along with Argentina, Fitch said in a note on May 16.

Turkey’s private sector long-term foreign loans moved up 2.5% q/q to stand at $227bn as of end-March, the central bank said on May 17.

The country's private sector long-term foreign debt moved up 9% y/y to stand at $221bn as of end-2017 from $202bn at end-2016.

Turkey’s current account deficit widened by 42% y/y to $47.1bn in 2017, driven by rising gold imports and energy prices.

Its gross external debt stock rose by 11% y/y to reach $453bn by the end of 2017, the Treasury said on March 30.

The gross external debt stock corresponded to 53.3% of GDP at the end of 2017, the highest level recorded since Q1 2003.

Turkey's net external debt stock also increased by 3% q/q and 15% y/y to $291bn as of the end of 2017. The net external debt stock to GDP ratio rose to 34.2% at end of Q1, the highest level recorded since Q2 2003.

Signs of major conglomerates struggling to pay their hard currency-denominated debts have set off alarm bells.

“There is a risk of a hard landing for Turkey’s overheating, credit-fueled economy,” S&P said on May 1 when it cut Turkey’s credit rating further into junk. “This is reflected in the rising imbalances in Turkey’s economy, most notably in its widening debt-financed current account deficit and high inflation.”

On April 16, Moody’s issued a note saying that the prolonged weakness of the TRY combined with high inflation would likely increase problem loans for Turkey’s banks as the private sector would have a tougher job on its hands to repay its foreign currency-denominated debt.

Analysts see Turkey's economic health as dangerously reliant on hot inflows of foreign external financing to enable growth. Turkey, loaded up on hard-currency debt, is badly exposed by the severe devaluation of the TRY.