Turkish government's gross debt stock grows 41% y/y in July, highest growth since March 2003

Turkish government's gross debt stock grows 41% y/y in July, highest growth since March 2003
By bne IntelliNews September 20, 2018

The gross debt stock of Turkey's central government jumped by 14% m/m and 41% y/y to stand at Turkish lira (TRY) 1.15tn (€136bn) in July, the Treasury said on September 20.

Annual growth in the government’s gross debt stock declined to 12% in January but it has since stayed on an escalating path month by month. July's growth was the highest recorded since March 2003.

The gross debt stock was TRY760bn at end-2016 and TRY876bn at end-2017.

The government’s domestic debt stock rose by 1% m/m to TRY579bn, while the external debt stock leapt by 31% m/m to TRY574bn due to the severe depreciation in the lira.

Across January-August, Turkey’s budget deficit expanded by 102% y/y to TRY51bn.

For the full year of 2017, the central government budget balance showed a deficit of TRY47.8bn, below expectations at around 1.5% of GDP.

Under Turkey’s new economic programme announced on September 20 by Erdogan’s son-in-law and Finance Minister Berat Albayrak, the target for the 2018 budget deficit/GDP ratio remained unchanged at 1.9% while the budget deficit target rose to TRY72.1bn from TRY65.9bn.

Turkey’s public net debt stock rose by 17% y/y and 4% q/q to TRY272bn as of the end of March, the highest level registered since Q2 2012, the Treasury said on June 29.

It remained unchanged at 8.4% of GDP at end-March compared to the end of 2017.

The EU-defined general government debt stock rose by 18% y/y and 5% q/q to reach TRY922bn at the end of March. The EU-defined debt stock to GDP ratio edged up from 28.3% at the end of 2017 to 28.4% at the end of March.

The government is targeting an increase in the EU-defined debt stock to GDP ratio to 31.1% in 2018, according to the new economic programme.

President Recep Tayyip Erdogan announced on September 16 that Turkey was freezing new government investment projects.