With the increase in risks related to foreign debts, it has become a matter of debate whether Turkey will enter into a debt crisis. So, what is the picture of Turkey’s external debts and how do experts assess the risk of a debt crisis?
While Turkey is struggling with the economic turmoil caused by the currency crisis and inflation, experts have recently started expressing the opinion that a possible debt crisis could cause great damage to the country’s economy, noting that the country’s risk level is alarming.
The fact that Turkey’s credit insolvency risk (CDS) has increased and borrowing costs have increased in parallel has raised questions about whether Turkey is at risk of a possible debt crisis.
This fear was triggered by the fact that credit rating agencies also kept their outlook at a negative level regarding Turkey’s ability to meet its financial obligations.
So, what is the picture of Turkey’s foreign debts and how do experts assess the risk of a debt crisis?
THE RISK OF CREDIT INSOLVENCY IS INCREASING
After Turkey’s 5-year credit risk premium approached 900 points in recent weeks, it completed last week at around 840 points. CDS, that is, the credit risk premium, varies depending on the economic and political risk development of countries.
The approach of CDS to 900 basis points brings the cost of external borrowing to double digits, while the increase in the cost of borrowing also indicates an increased risk of a balance of payments crisis.
TABLE OF DEBTS OF TURKEY
According to the data of the Ministry of Treasury and Finance, Turkey’s gross foreign debt stock was announced as $ 451.2 billion as of March 31, and its net foreign debt stock was $ 231.4 billion.
According to the data of the Central Bank of the Republic of Turkey (CBRT), the ‘short-term foreign debt stock by remaining maturity’ calculated using external debt data that has expired in Turkey for 1 year or less continued to be at record levels with $ 182.3 billion as of May.
As of the end of May, Turkey’s short-term foreign debt stock amounted to 134.5 billion dollars, an increase of 10.6 percent compared to the end of 2021. On the other hand, the short-term debt of the public sector increased by 9.5 percent compared to the end of 2021 and increased by $ 24.3 billion.
Article translated from source on below link
sozcu.com.tr/2022/ekonomi/turkiye-borc-krizine-girer-mi-7266980/
