The interest burden on the foreign debt is three times the principal

The Ministry of Finance and Finance announced the Treasury financing program for the months of March, April and May. Accordingly, the Treasury will make a total debt repayment of TL 273.2 billion in these three months, of which TL 159.8 billion is internal debt and TL 113.4 billion is external debt. In these three months, 59 percent of the debt service will consist of interest payments, and the remaining 41 percent will consist of principal. Assessment of Debt Payment Projection to SÖZCÜ, Istanbul University Faculty of Economics Department of Finance Professor Prof. Dr. Binhan Elif Yılmaz said: “However, in 2023, the Treasury is expected to pay a total of 1 1 trillion TL of internal and external debt.

HOW IS COUNTRY RISK REDUCED?

In January, the interest charge for paying the external debt tripled the principal. According to the debt payment projection for May, the interest to be paid in the payment of the foreign debt to creditors will be approximately three times the principal amount. Since the interest on the debt is an expense item in the budget, it is financed by the taxes we pay. Stating that Turkey’s need for foreign exchange is increasing day by day, Yılmaz said: “If CBRT reserves strengthen, CDS decrease, and if political uncertainties decrease, country risk will decrease and foreign borrowing opportunities may improve.” . According to the Treasury Financing Program published by the Ministry of Finance, 44 percent of the debt service in March, 36 percent in April, and 84 percent in May will correspond to interest payments. Payment projections show that interest payments on debt exceed principal payments. In these three months, principal payments on internal and external debt will be TL 112.8 billion, while interest payments will be TL 160.4 billion.

Additional budget this year would not be surprising

The Ministry of Finance announced that the issue of the additional budget was not on the agenda recently, but Prof. Dr. Binhan Elif Yılmaz said that it would not be surprising if the additional budget made it to the agenda. Recalling that an additional budget of about 80 percent of the annual budget was issued in mid-2022, Yılmaz said, “The electoral process, the earthquake, and inflation will cause budget expenditures to increase beyond expectations. While the electoral economics, the high inflation and the earthquakes we are experiencing in 2023 reveal the unpredictability of the future of the economy, it will not be surprising to move away from fiscal discipline and bring an additional budget to the agenda.

We found foreign debt at 9.5 percent interest

Stating that the country risk premium (CDS) is around 500, and the country risk in foreign borrowing is gradually increasing, Prof. Dr. Binhan Elif Yılmaz pointed out that the Treasury auctions held in the first two months of this year they had external debt with a rate of 9.5 percent in dollar terms.