142
runaway inflation. As at end-2016, the gross public debt had more than halved to 32% while
its inflation rate was brought down to only 8.5% (as depicted in Chart 4.47). Improved
management of public debt through optimising borrowing costs, among other solutions, had
extended the maturities of debt issues; fixed-rate LCY borrowings had been among the
measures that had enabled Turkey to lighten its debt burden.
Chart 4.47: Turkey’s Gross Public Sector Debt (2001-2016)
Source: Undersecretariat of Treasury
Table 4.20: Turkey’s Budget Deficits (2014-2017f)
TL billion 2014 2015 2016e 2017*
Government revenue 425.4 482.8 554.1 574.6
Government expenditure 448.8 506.3 584.1 601.1
Budget deficit (23.4) (23.5) (29.9) (26.5)
Source: Ministry of Finance (MOF), Turkey
* Based on figures as at end-November 2017.
Turkey has historically relied heavily on capital-market instruments through the issuance of
domestic and external bonds to finance government budgets (refer to Table 4.20 on Turkey’s
budget deficits from 2014 to 2017). With the amendment of the law for sukuk issuances in
2012, Turkey issued its first USD and LCY sukuk in 2012, which facilitated the setting up of
sovereign benchmark yield curves for corporate sukuk issuance. To date, even though
sovereign sukuk only accounts around 3% of its total sovereign debt issues, commitments
under the MTP (2016-2018), MTP (2017-2019) and MTP (2018-2020) appear to have set the
stage for interest-free instruments to potentially form part of future budgetary requirements.
Hazine Müsteşarlığı Varlık Kiralama A.S. (HMVKS) has issued sukuk in the local market
regularly since 2012 according to a calendar that has been announced at the beginning of the
year. The maturity of the sukuk was 2 years between 2012-2015, however, since 2016, the
HMVKŞ has issued both 2 and 5 years sukuk. Moreover, the HMVKŞ started to issue CPI
indexed ijarah sukuk since 2016 in the the local market, as well as fixed lease rate sukuk. Also,
to diversify sukuk instruments, in 2017 the HMVKŞ started to issue gold denominated ijarah
sukuk in the local market to retail investors.
In the international market, the HMVKŞ has issued USD denominated sukuks that have
maturities between 5 and 10 years. Table 4.21 shows the number of domestic and
international sukuk issuances by Turkish government from 2012 to October 2017.