The gross debt stock of Turkey's central government increased by 0.46% m/m and 14.5% y/y to stand at TRY897bn (€186bn) in February, the Treasury announced on March 20.
The gross debt stock was TRY760bn at the end of 2016 and TRY876.5bn at end-2017.
The country’s domestic debt stock rose by 0.75% m/m to TRY544bn, while the external debt stock edged up 0.03% m/m to TRY353bn.
Earlier this month, Moody’s Investor Services lowered the Turkish government’s long-term issuer and senior unsecured debt ratings to two levels below investment grade—taking it to ‘Ba2’ from ‘Ba1’. The outlook was given as stable.
Moody’s noted that although the government's own external borrowing needs are relatively low, the country as a whole has very large external financing needs given sizeable current account deficits, maturing long-term debt and high levels of short-term debt.
Last month, S&P Global Ratings affirmed its unsolicited 'BB/B' foreign currency long- and short-term sovereign credit ratings and its unsolicited 'BB+/B' local currency long- and short-term sovereign credit ratings on Turkey with negative outlook.
In the case of an associated economic slowdown, S&P expects Turkey's government would increasingly rely on budgetary and quasi fiscal stimuli to support the economy, as it did in 2017 and 2009, resulting in larger fiscal deficits and a rise in public debt that could lead to rating cuts.