We had better not forget this; the biggest problem of Turkish economy is still the problem of debt. This problem is not of the kind that can easily be overcome and it negatively affects our ability to act in the crisis which takes place close at hand. A hot battle that may occur in our region can drag the economy which is about to overcome the crisis into a new trouble.
The indebtedness interest rates of the Treasury go along at a level of 58-59 % at present. In last week's sale of drafts of a due date of 371 days, the interest rate has become 58 %. The inflation target of the year 2003 is 20 %. In yesterday's bid which was over American dollar, the rate was 6.6 %.
The most important criterion in the state's indebtedness is the future inflation. If you get into debt of high rate when the expected inflation is low, it means that you are at loss.
The difference between 58 % and the inflation constitutes the cost of the debt and this cost is very high in terms of the inflation that has been aimed for. A cost that is almost unique in the world.
The only reason for this rate's being so high is not the rumor of war, but it is the most important reason for the moment. No one can ever say "If the intervention to Iraq wasn't on the agenda, the Treasure couldn't get into debt with a rate better than this."
There are three main troubles with the debt. The figure of debt is much over the tolerable limits, besides the due date is short. Economy's ability to clear the debts is low. When this is the case, the rumors of war increase the "risk premium" asked by those who lend money. The rate may increase more during the war.
The total of the Treasury's debts inside the country is 149.9 quadrillion Turkish liras at the end of 2002. This corresponds to 91.7 billion American dollars. The total of the Treasury's own external debts is 56.6 billion dollars. If we add to this the debts of the state institutions mainly the Central Bank and other state banks, this figure exceeds 80 billion dollars. To sum up, the total of the state's internal and external debts is more than the Gross National Product and it exceeds 170 billion dollars.
The main trouble in the transformation of the debts emerges in the internal debts. The Treasury borrowed an amount of 210 quadrillion Turkish liras with a due date of approximately 31 months in the year 2001 when the crisis had taken place, it paid an amount of 164 quadrillion liras. While the due date decreased to 20.6 months, the total amount of debt became 125 quadrillion liras in 2002. The amount that was paid is 141 quadrillion liras. The main reason that enabled the Treasury to be a net debt payer is the money that came from the International Monetary Fund (IMF).
This year the Treasury has to find nearly 100 quadrillion liras in order to pay the debts which fall due. But this year there will be no IMF aid as in the year 2001.
Though USA explained that it will compensate the losses Turkey will probably be subject to because of the war with Iraq, the figures reflected in the mass media seem to be far from compensating the risk undertaken. The fact that figures that are articulated are mainly in the form of guarantee for the credits or debts reinforces the anxieties. The latest example is the news that appeared in The Financial Times, the English newspaper. According to the newspaper, USA offered Turkey options of a donation of 3 billion dollars and a debt guarantee of 10 billion dollars, and a donation of 2 billion dollars and a debt guarantee of 20 billion dollars.
In the light of the information we gave, I think there is no need to say that these figures don't mean anything, either. Let's only say this: The Treasury has made bids of nearly 16 quadrillion liras in the last two months when the crisis of Iraq has been intensified. Even if we suppose that this uncertainty of Iraq affects the interests by 10 %, the additional cost appears to be approximately 1 billion dollars. And add to this the increase in the costs of external debts.
We don't start discussing physical and moral damage the probable war is causing and is going to cause in other fields…
