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The risk of Turkey’s debt burden increases

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S.

Over the decades, unaccounted and bookless debts from the wind of neoliberal capitalism have carried Turkey’s financial problem into dangerous waters. We can say that not only the Turkish economy, but also its political independence is at risk, especially in terms of the extent reached by the dependence on foreign resources.

It is obvious that a country that consumes more than it produces, spends more than it earns, has no international competitiveness in manufacturing and brands, imports more than it exports, and is constantly spinning the wheels of the economy by borrowing more money, will eventually be they have difficulty in finding foreign resources.

When we look at Turkey’s level of foreign and domestic debt and the funding burden (interest and exchange rate differences), we see that we are faced with an unsustainable situation that not even future generations can afford.

TURKEY’S TOTAL EXTERNAL DEBT IS AT RECORD LEVEL

According to data announced by the Treasury and Finance Ministry, Turkey’s total gross external debt stock, which was $ 415.1 billion at the end of 2021, increased by $ 36.1 billion (8.7%). ) as of March 31, 2022 and reached $ 451.2 billion in five months, rose to 59.8 percent. Of this stock of debt, $ 182.7 billion belongs to the public sector, $ 29.8 billion to the central bank and $ 238.6 billion to the private sector.

Furthermore, if we take into account that the public has $ 29.3 billion and the private sector domestic debt of $ 136.3 billion, we find that Turkey’s total gross foreign currency debt reaches $ 617 billion, that is. 78% of the national income.

CENTRAL GOVERNMENT DEBT AND HONOR OF INTEREST RAPIDLY INCREASE

The Treasury and Finance Ministry announced that the central government’s total debt stock, which was 2 trillion Turkish Lira 748 billion in 2021, increased by 616.2 billion Turkish Lira (22.4%) to 31 May 2022 and reached 3 trillion 364 billion Turkish lira. Of this stock of debt, which was declared in Turkish Lira, 1 trillion Turkish Lira 565 billion is internal debt, 1 trillion Turkish Lira 799 billion is foreign debt. Furthermore, 1,087.3 billion Turkish Lira of this debt is in Turkish Lira and 2,276.3 billion Turkish Lira in foreign currency.

The interest paid by the central government in the first five months of 2022 increased by 49.6 percent compared to the same period of the previous year and reached 121.9 billion lire. With the added amount of the additional budget, it is expected that TL 329.8 billion of interest will be paid in 2022. Furthermore, it was announced that an exchange difference of TL 21.1 billion was paid in three months due to the currency deposits. With the figures added to the reserve allocations of the budget, it appears that a total of TL 66.2 billion of exchange rate difference will be paid in 2022.

However, it is already clear that the interest and exchange rate differences in the budget will exceed the anticipated amounts. Because the country’s international credit risk premium has exceeded 800 basis points and foreign capital outflows are observed on every occasion. While Treasury borrowing rates were gradually rising at home and abroad, large debts have already begun to form in the inflation-linked bonds issued, even if they have not reflected in the ledgers. In servicing the Treasury’s internal debt, the interest payments have already exceeded the principal payments. Furthermore, the burdens of debt-taking commitments due to public-private partnership projects worsen the central government’s funding structure.

MORE THAN $ 200 BILLION NEEDED IN A PERIOD OF 12 MONTHS

The short-term debt statistics announced by the Central Bank in late April also don’t look very encouraging. At the end of April, Turkey’s stock of foreign debt with a maturity of one year or less, regardless of its original maturity, was $ 182.4 billion. Of these, $ 35.4 billion belongs to the public, $ 29.4 billion belongs to the central bank, and $ 117.6 billion belongs to the private sector.

The current account deficit, which was $ 28.1 billion in the first five months of 2022, looks set to rise to $ 40 billion by the end of the year. In this case, it is understood that Turkey will need an external resource of over $ 200 billion over a 12-month period both to pay off its short-term debts and to finance this current account deficit of over $ 40 billion. dollars.

As of March 31st, the real sector has a debt of £ 6.5 trillion, banks £ 1.7 trillion and households £ 1.2 trillion. Worse still, families lose the ability to pay their debts due to high inflation. In such an atmosphere “Holidays, what is it for me, problems drip into my heart” I congratulate all my readers on Eid-al-Adha.

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