Economic Analysis of Turkey's External Debt Components

Abstract

With the introduction of the world economy into the process of globalization and the classical fiscal approach to modern finance, foreign borrowing has taken an important place in the economic relations between countries. External borrowing has been the source of financing that developing countries, especially those facing domestic resource shortages, have to resort to in the process of growth and development. Looking at the foreign debt variables from the point of view of our country, it is seen that it is an important agenda from the Ottoman Empire to the present day. Studies on Turkey's external debt show that it is limited to a number of ratios, such as the amount of debt, the ratio of GDP, rather than the components of debt. The aim of this study is to contribute to this deficiency in literature. In addition to the development of foreign debt in Turkey over the years, criteria such as foreign exchange composition, maturity structure, payment projection, interest structure and distribution by borrowers will be presented. In particular, when the foreign currency composition of the external debt is examined, it is observed that almost all of it is made in the currencies of the dollar and the euro. This makes it necessary to examine the negative effects of the foreign currency risk arising from the recent exchange rate volatility on external borrowings. In addition, the rise in the dollar and the euro rate led the private sector to serious difficulties when it comes to the fact that the large proportion of external debt is private sector debt. However, the fact that Turkey's debts due until the end of the year has reached a serious amount is seen as another reason that both the public and the private sector are in trouble. The study will be completed with policy recommendations against all these criteria.

Keywords: External Debt, Currency Risk, Public-Private Sector Dept, Short-term External Debt