Skip to main content

Who is at the sharp end of Turkey’s currency crisis?

After years of bold borrowing from abroad, Turkish conglomerates, including government cronies, are sitting on a powder keg as the country’s currency turmoil keeps augmenting their debt repayment woes.
A money changer counts Turkish lira banknotes at a currency exchange office in Istanbul, Turkey August 13, 2018. REUTERS/Murad Sezer - RC139D2160B0
Read in 

For years, Turkey encouraged sectors that lavishly borrowed and spent foreign exchange rather than investments that would generate much-needed hard currency. The party is now over. Ruled by the Islamist Justice and Development Party (AKP) since 2002, the country has amassed a giant external debt of $466 billion. Although the writing was on the wall for months, the Turkish economy hit the rocks last week.

Plagued by a chronic current account deficit and unrelenting inflation and unemployment rates, the Turkish economy’s burden has recently grown with gaping public deficits, resulting in “non-investment” grades by international credit rating agencies. On top of all this came severe tensions with the United States that resulted in unprecedented sanctions on Ankara, culminating in a Black Friday for the Turkish economy Aug. 10.

Access the Middle East news and analysis you can trust

Join our community of Middle East readers to experience all of Al-Monitor, including 24/7 news, analyses, memos, reports and newsletters.


Only $100 per year.