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Improving Public Debt Management

In the OIC Member Countries

157

Debt reporting

The Undersecretariat of Treasury also publishes public debt statistics for Turkey. It provides

detailed and upto date statistics on central government debt. In particular, the stocks of

domestic and external debt are provided on a monthly basis as well as their structure with

respect to maturity, currency denomination and interest type. There is a special series

applying the principles of the EU for its Excessive Debt Procedure for debt accounting. This

data is made available online. Moreover, the Undersecretariat of Treasury publishes a monthly

and annual public debt management report, which visualizes debt developments in a large

number of appropriate graphs.

Debt management strategy (incl. risk management)

The fundamental objectives of Turkey’s debt management are defined in the constituted

Regulation on the Principles and Procedures for Coordination and Implementation of Debt and

Risk Management. According to this regulation, Turkey’s public debt risk management is based

on “a sustainable, transparent and accountable loan policy that conforms to monetary and

fiscal policies in respect to macroeconomic equilibriums.” Further, “to address finance

requirements in limits of risk level which is determined by taking domestic and international

market conditions and cost factors into consideration with minimum cost as much as possible

in medium and long terms”.

The Turkish government pursues a debt management approach, which deviates in some

aspects from the traditional view of debt management. Traditionally, governments aim at

borrowing at the lowest cost and with a reasonable risk level while strengthening the

structure of the debt stock against external shocks. According to the Undersecretariat of

Treasury (2015), Turkey pursues a holistic approach within the broader framework of

financial AssetLiability Management (ALM), which takes a broader view in analyzing not only

liabilities, but liabilities and assets together determine the desirable structure of both.

The Undersecretariat of Treasury monitors macroeconomic risks related to budget and

financial developments and reports to the DRMC. In this process, all relevant public authorities

are included when necessary and financing programs are updated in correspondence

(Undersecretariat of Tresaury 2015).

Article 4 of the “Regulation on the Principles and Procedures of Coordination and Execution of

Debt and Risk Management” defines the following principles for public debt management:

a) Follow a sustainable, transparent and accountable borrowing policy, which is in line with

monetary and fiscal policies and takes the macroeconomic balances into account;

b) Fulfill the financing requirements at the lowest possible cost in the medium and long term

in accordance with the levels of risk determined considering the domestic and external

market conditions and costs.

The Undersecretariat of Treasury formulates strategic benchmarks. Benchmarks are set every

year for the following three years and front offices conduct debt management activities in line

with those benchmarks. Debt management aims at increasing the average maturity of domestic

public debt while reducing domestic debt maturing within one year. Liquidity risk should also

be minimized by holding sufficient cash reserves. Exposure to interest rate fluctuations is

intended to be limited by the use of fixed rate instruments as the main source of domestic

currency borrowing; as such the share of the domestic currency debt stock with an interest

rate refixing period of less than one year is intended to be reduced. To limit detrimental