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Deficit of 401 billion dollars. Turkey enters a spiral of bankruptcy? "The intervention of Turkey in the spiral of bankruptcy?" Default default of $ 401 billion. Turkey intervened in a whirlwind. Bankruptcy? "
Turkish investors seem to have calmed down after their initial negative reaction to the appointment of Birat al-Bayrak, son-in-law of Prime Minister Recep Tayyip Erdogan, Minister of Finance and Treasury
Last week, Bayraq commented on a common economic policy. The government will ensure that fiscal and monetary policies harmonize Turkey's inflation rate with single digits, up from the current 15 percent. He also said the government would develop a medium-term plan that would be announced in the coming days or weeks.
If we add to this the plans to visit London to meet investors, the apostates of the conventional economic rules have been excluded from the margin, At least for the moment. However, levels of the lira and interest rates show that investors are still far from trusting economic policy under Erdogan's vast presidency.
During these relatively quiet days, it may be wise to switch to a data set The International Investment Center of Turkey is one that shows the external financial badets of its residents, ie the claims of non-residents plus the gold cover as reserve badets and the external financial obligations of non-resident residents. ] The difference between the total of these financial badets and the total financial obligations of the International Center for Investment is defined. In other words, the International Investment Center is the net amount of the rights of all non-resident residents in Turkey against Turkey's total obligations to non-residents.
When the net international investment center is Pur positive. But when it is negative – that is, when the liabilities are higher than the badets – it means that the country is a mere debtor. Thus, this measure allows us to know the magnitude of the external financial exposure of Turkey
The $ 401 billion deficit in May is huge and should receive the attention that 's expected. he deserves.
In May 2018, Turkish badets totaled $ 231.6 billion Compared to $ 232.7 billion at the end of 2017. On the other hand, the volume of Turkey's obligations towards the rest of the world to $ 632.5 billion of $ 691.7 billion over the same period. The net international investment center of Turkey, known as the difference between the badets and liabilities of Turkey abroad, is 400.9 billion, a huge figure even though it increased by $ 459.2 billion at the end of 2017 [19659005] The $ 58 billion decrease should not be considered a major improvement, as it is partly a result of a decrease in the value of commitments due to rapid decline of the Turkish lira since the beginning of this year.
Reserve badets rose to $ 107.3 billion at the end of May 2018, compared with $ 112 billion in the same period last year. Is certainly not good news
Other investments decreased 3.3% between the end of 2017 and 74 billion dollars. Foreign currency deposits and bank deposits – a secondary item for other investments – fell by 10.8 percent to $ 31.2 billion over the same period
. amounted to $ 139.5 billion at the end of May 2018, down 26.3%. The end of last year, reflecting changes in market value and exchange rates. This significant decline also shows how investors started to turn away from Turkey
Portfolio investment fell 9.4% to $ 161 billion at the end of 2017. Non-resident holdings fell by 24.7%. % to 39.1 billion dollars. Non-residents' share of domestic public debt fell 20.2% to $ 24.7 billion. At the same time, non-resident holdings of existing international bonds rose 3.8% to $ 46 billion.
Other investments increased by 2.1% to $ 332 billion at the end of 2017. Non-resident deposits in local banks increased by 3.4%. $ 37.8 billion. Turkish Lira deposits increased 4.3% to $ 13.7 billion. These movements reflect the rise in interest rates in Turkey.
The total foreign loans of local banks decreased by 0.4% over the end of last year to reach $ 94.4 billion. The first striking thing is that Turkey has a $ 401 billion deficit with the rest of the world in an environment where it is increasingly difficult to raise funds from other sectors. In emerging markets. This deficit is comparable to the size of the total economy of $ 880 billion
. These shortcomings reflect the way Turkey has built its economic growth on foreign borrowing in recent years when foreign currency borrowing was very cheap. Now, reading it is much depreciated and the fall has exceeded 20% by 2018 alone. The cost of finding enough strong currency to handle things is usually higher than that of Turkey.
The decline in reserve badets – well known to investors in light of the performance of the lira in recent months – is expected to herald the new government. The sharp decline in the $ 58 billion net investment center is not satisfactory given the details of this decline.
In addition, investments are falling steadily, as is the case for benefits such as foreign currency deposits.
The International Investment Center shows that Turkey is struggling to refinance its foreign currency bonds and that it benefits from its resources. There are still opportunities to raise money in foreign currencies, but these opportunities are more expensive and, of course, more risky when Turkey's economic growth slows.
A declining profit margin could soon make financiers more skeptical. The capacity of Turkish companies to repay their external debts. In addition, while external financing is alienated from Turkey, the IIC details also indicate that domestic funds are trying to escape the uncertain economic environment that emerges from the fact that the 58 billions of dollars is based on a reduction of commitments rather than an increase in badets. So, the game has already begun to wait. If the Treasury Secretary and Finance Minister Birat Al-Bayraq do not quickly turn a conservative approach to Turkey's economic problems into action on the ground, Turkey will wait for very difficult times.
