The latest figures from the external debt front in the Turkish economy have brought the maturity structure rather than the total debt amount to the agenda again. While the ratio of foreign debt stock to national income at 32.4 percent indicates a more controlled situation compared to previous periods, it is noteworthy that the liabilities that will mature in the next 12 months will reach 248 billion dollars. While banks and companies convert a significant part of their maturing debts into new loans, commercial loans and deposits are also included in the short-term external debt account.
248 BILLION DOLLAR CALENDAR
The foreign liability that Türkiye must pay within the next year has reached approximately a quarter of a trillion dollars. On the other hand, the total reserve assets of the Central Bank and banks are at the level of 209 billion dollars. However, according to analysts, it is misleading to conclude that Türkiye has a foreign exchange deficit of approximately 39 billion dollars by subtracting the two figures from each other. Not all of the reserves are used for foreign debt payments, and the entire $248 billion debt does not need to be covered from reserves. According to experts, the main factor that determines the balance is whether Türkiye can continue to borrow from abroad.
INTEREST BILL IS IMPORTANT
On the foreign debt side, one of the main problems of the coming period will be the interest rate at which the debt will be converted rather than its amount. It is emphasized that if Türkiye’s access to external financing becomes more expensive, the resource costs of banks and real sector companies will increase, and this may have effects ranging from loan interest rates to investment appetite. The fact that global interest rates remain high also restricts the room for movement for economies that regularly need external financing, such as Türkiye. Exchange rate movements are another sensitive topic. Although the rise in the dollar does not directly increase Türkiye’s dollar-denominated foreign debt, it increases the TL-denominated debt burden of companies that do not have foreign currency income.
RESERVE BUFFER
The most important difference for Türkiye compared to previous years is the recovery on the reserve side. The increase in Central Bank reserves creates a stronger buffer against possible external shocks. The course of the current account deficit, the cost of energy imports, foreign capital inflows and external debt rollover rates stand out as other parts of the same picture. Economic Expert-Economist Barlas Yurtsever draws attention to the rise in oil and natural gas prices, especially for the winter period, and says, “As the energy bill grows, Türkiye’s foreign exchange need increases, while the financing of the current account deficit is added to the external debt cycle. The risk of war in global markets increases energy prices and financing costs at the same time, thus creating two-way pressure for Türkiye.”
THE MAIN PROBLEM IS THE PAYMENT SCHEDULE
Yurtsever also stated that the latest figures show that the high need for external financing continues, rather than an alarming view in the ratio of foreign debt to national income.The critical threshold for Türkiye is the payment schedule of $248 billion accumulated over the next 12 months, rather than the total debt of $552 billion. “A sharp contraction in external resource channels could make the same situation much more fragile.”
