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December 10, 2019

Turkey is preparing to raise debt limit

TRY debt limitTurkey is preparing to raise its debt limit for the first time since 2009, after the loans in the first half of the year left the treasury near the ceiling. The government is preparing a change to the debt law by the end of the year, according to the ministry representatives, but the plans are not yet officially announced.

The Public Finance Laws currently allow the government to borrow about 47.5 billion TRY ($ 13.3 billion USD) this year.

Turkey is in the midst of a credit boom, with the government seeking to boost lending to revive the economy, which was hit by a failed coup in July last year. The measures taken include tax incentives, bank mitigation, and etc.

Loans in the first six months have already reached 46.5 billion TRY, including 26.7 billion TRY in the domestic market and 19.8 billion TRY abroad.

The government has increased spending to boost growth and central bankers said the budget deficit target of 1.7% this year could be exceeded by up to 1 percentage point.

The government has already sold debt in foreign currency for 6.25 billion USD in 2017, overtaking its annual target. At the same time, analysts say plans for local borrowing in July suggest that selling pounds in TRY will outweigh the redemption of bonds this year for the first time since 2009.

The debt-to-GDP ratio is about 30% by the end of 2016, which is half the level decade ago and is relatively good for most emerging markets.

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