According to forecasts in a report released by the undersecretariat of the Treasury yesterday, Turkey’s debt service is predicted to improve, though gradually. The report notes that as the global economy contracted, many countries’ budgets fell into a deficit, including Turkey’s. Moreover, the report noted that although the external debt and other financing requirements were as expected in 2009, the deviation of internal debt from expectations caused an above average contribution to the servicing program budget, thereby creating a 103.4 percent total internal debt rollover ratio. This high ratio meant that more debt was incurred to service old debt.
According to the report, the payments on public debt to be made in 2010 will total TL 200.3 billion, with TL 182.6 billion paid to internal sources of the debt. TL 138.4 billion of the internal debt paid consists of principal, whereas 44.2 billion is interest payments. Of the TL 17.7 billion of external debts serviced, TL 11.2 billion is principal, and 6.5 billion is interest. TL 167 billion of the internal debt paid is TL-based, whereas TL 15.6 billion is denominated in foreign currencies.
The Treasury predicts that TL 195.3 billion of debts will materialize by the end of 2010, with TL 181.6 billion in internal debt. This will bring the internal debt service ratio from 103.4 percent predicted for 2009, to 99.5 percent in 2010. According to the report, thus far in 2009 TL 138.9 billion in internal debt has been realized, along with TL 11.2 billion in external debt, for a total of TL 150.1 billion.
According to the report, the Treasury plans to issue TL 8.4 billion in bonds to international capital markets, and forecasts TL 5.3 billion of external finance from the World Bank, the European Investment Bank and other external financers for projects and programs.
The report also noted that since 2003 the Treasury has been working to reduce risks in its debt portfolio, and that with this strategy it has reduced risks deriving from liquidity in debt stock, high interest rates and exchange rate fluctuations. The report noted that in 2003, 58 percent of the central government’s debt was denominated in foreign currencies or indexed to them, and that in October 2009 had fallen to 30 percent.
