Turkey’s debts hit $ 1.2 trillion as foreign exchange dependency of the country grows
The IIF said the borrowing costs of developing countries with high sensitivity to the negative effects of climate change could also rise. According to the report, it leads to an above-average cost in Turkey.
Global debt fell by US$ 1.7 trillion to US$ 289 trillion in the first quarter of the year, according to the Institute of International Finance’s (IIF) “global debt Monitoring Report.” However, the total debt of developing countries, including Turkey, has increased by US$ 11 trillion since the end of 2019 to US$ 86 trillion (246 percent of gross domestic product).
Among developing countries, dependence on foreign currency increased in Turkey and Chile, most. The ratio of total debt to national income in Turkey, which was 144.3% in the first quarter of 2020, was 163.4% in the first quarter of 2021. Turkey’s total debt reached US$ 1 trillion 171.5 billion in dollars when calculated according to the national income of 2020, which is announced by TUIK as $ 717 billion. 87.2 percent of this debt was foreign currency debt.
Climate vulnerability drives up costs
“When vulnerability to climate variability increases by 10%, the borrowing cost of developing governments increases by 1% on average,” the IIF report said, noting that the borrowing costs of developing countries with high sensitivity to the negative effects of climate change may also increase.
According to the report, it leads to an above-average cost in Turkey. Along with Argentina, Nigeria, Egypt and Pakistan, Turkey is among the developing countries with the highest vulnerability to climate change and the lowest resistance. The failure to cut carbon emissions is also dampening investors ‘ appetite for emerging assets, according to the report.
