Improving Public Debt Management
In the OIC Member Countries
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4.1.13 Republic of Turkey In 2015, the Republic of Turkey’s gross general government debttoGDP ratio was 27.5%.
Since 2006 Turkey has managed to reduce its gross general government debt relative to GDP
by around 16 percentage points and it is projected to fall further in the coming years (see
Figure 4-35).
Since 2006, Turkey’s primary budget balance of general government has been in deficit only
once, namely in 2009. Interest payments on outstanding debt have largely offset the surplus of
the primary budget balance and the overall budget balance has been negative during the
period of consideration since 2006. Since 2011 the shortfall in the budget balance has been
relatively stable at around 1.3% of GDP on average. Interest payments are decreasing
continuously and haven fallen from around 6.1% of GDP in 2006 to about 2.7% in 2015 and
are expected to remain stable (see Figure 4-35). Turkey has received favorable assessments of
its public debt dynamics by international organizations. For example, the Debt Sustainability
Analysis (DSA) of the IMF (2016) concludes that Turkey’s public debt is sustainable even
under different shock scenarios. It is, however, sensitive to declines in the GDP growth rate.
Despite this potential threat, the general government debt to GDP ratio is expected to decline
further. Further, the IMF highlights the significant decrease in gross public financing needs to
5.1% of GDP, while the average between 2005 and 2013 used to be around 15% (IMF 2016)31.
Main explicit contingent liabilities of the Turkish government are Treasury repayment
guarantees, debt assumption commitments, Treasury investment guarantees, demand
guarantees provided to Public Private Partnerships (PPPs) and depository insurance scheme.
Of these explicit contingent liabilities, the beneficiaries of Treasury repayment guarantees are
SOEs, state and development banks, municipalities and municipal administrations. These
repayment guarantees are provided to credits given by international financial institutions for
project finance credits dedicated to specific sectors such as renewable energy, infrastructure
and SMEs. The amount of such Treasury repayment guarantees are around $12.5 billion as of
September 30, 2016. A second kind of explicit Treasury guarantee, the debt assumption
commitments are provided to the creditors of PPPs as a credit enhancement tool triggered in
the case of an early termination of the PPP contract between the public contracting authority
and the company carrying out the project. It results in the acquisition of the assets of the
project by public as well as the liabilities (senior debt) outstanding as of the date of
termination of the PPP contract. The total amount of debt assumption commitments provided
by Treasury as of November 30, 2016 is around $8.7 billion.
31 The GDP series for Turkey has been revised after the referred IMF (2016) report was published. Therefore, the budgetfigures in this paragraph reflect the shares as a percent of the previous GDP series before revision.