Turkey's private sector foreign debt reaches a record high of $195.4 billion, marking a 67-month peak.
In a recent development, the foreign debt of Turkey's private sector has reached a six-year high, amounting to $195.4 billion at the end of June 2025. This surge in debt is notable, marking the highest level since December 2018.
The composition of this foreign debt reveals a significant reliance on U.S. dollars and euros, particularly for long-term obligations. According to the latest data, long-term debt denominated in U.S. dollars constitutes 57.9% of the total long-term debt, while the long-term debt denominated in euros accounts for 32.9%. In contrast, long-term debt denominated in Turkish lira and other currencies make up only 1.9% and 7.3%, respectively.
Non-financial companies' debt rose by $7.7 billion to $111.4 billion, with $15.4 billion in long-term debt due within one year. Similarly, $4.7 billion in long-term debt owed by non-bank financial institutions is also due within the same timeframe. On the other hand, debt owed by financial institutions climbed by $4 billion to $84 billion, with long-term loans increasing by $16.9 billion to $185.2 billion.
Short-term debt, excluding trade credits, fell by $5.2 billion to $10.2 billion. Interestingly, short-term debt denominated in U.S. dollars constitutes 38.7% of the total short-term debt, while short-term debt denominated in Turkish lira accounts for 37% of the total. Short-term debt denominated in euros makes up 21.7%, with only 2.6% in other currencies.
This heavy reliance on U.S. dollars and euros, particularly for long-term obligations, poses potential risks for Turkey's economy given the volatile nature of these currencies. It is essential for the country to manage its foreign debt carefully to mitigate these risks and ensure sustainable economic growth.
[1] Data source: Central Bank of the Republic of Turkey [2] Data as of June 2025
The staggering foreign debt of Turkey's private sector, reaching $195.4 billion as of June 2025, indicates a considerable percentage of long-term obligations denominated in U.S. dollars and euros, amounting to 57.9% and 32.9%, respectively. This heavy reliance on these volatile currencies in the Turkish industry, particularly finance, could potentially pose risks for the country's economic growth.
