Improving Public Debt Management
In the OIC Member Countries
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effects associated with exchange rate fluctuations, Turkey has been borrowing solely in
domestic currency in domestic market since 2010. (Undersecretariat of Treasury 2016a).
From a budgetary and cash management point of view, it is necessary to monitor, limit and
mitigate the risks associated with contingent liabilities. In this context, the Turkish Treasury
analyzes the impact of the Treasury debt assumption commitments, Treasury investment
guarantees and Treasury repayment guarantees on the outstanding debt stock, the fiscal
discipline and the debt sustainability under different scenarios. To limit the risks associated
with these contingent liabilities, two separate ceilings are introduced in the annual central
government budget law with regard to the Treasury repayment guarantees and Treasury debt
assumption commitments. For 2017, both ceilings equal to $4 billion. Mitigation schemes
include the Risk account (an escrow account to pay for the undertaken amounts from Treasury
repayment guarantees), Savings Deposit Insurance Fund and Natural Disaster Catastrophe
Insurance Pool.
Borrowing and Related Financial Activities
Operations (incl. Islamic finance)In terms of domestic borrowing, Turkey issues two, five and ten year fixed rate benchmark
bonds on a regular basis. Eurobonds are issued with maturities of eight, ten, eleven, twelve and
30 years. In addition, lease certificates, which were issued in 2012 for the first time, have
turned into a regularly used financing instrument. This type of Islamic finance instrument
made up to 3.7% of total borrowing in 2015 (see Figure 437). Depending on the redemption
profile and market conditions, Turkish Treasury is also issuing TL denominated zero coupon
Treasury Bills, zero coupon Government Bonds and 7 year floating rate notes. There are also
bonds indexed to CPI.
Figure 4-37: Turkey - Domestic Borrowing by Instruments (2015)
Source: Undersecretariat of Treasury (2016b, p. 26).10year bond yields are quite volatile ranging between 6% and 11% during the last five years,
yet they have not reached postLehman heights (see Figure 438).