Turkey’s external debt drops $25 billion at a stroke
The jury is still out on Turkey’s downward revision of short-term external debt, but similar revisions that improved GDP figures in the past have cast doubt on the credibility of Ankara’s economic data.
Turkey’s central bank has revised some of its data compilation methods and definitions, as a result of which the country’s short-term external debt — foreign liabilities with a maturity of up to 12 months — dropped to $164 billion from $189 billion over a month.
The bank justified the revision on the grounds of inconsistencies identified in trade credits data, saying that the revised statistics, released Aug. 19, were the outcome of efforts to improve data quality and compliance with international standards. The new methodology, which relies on direct reporting at company level rather than macro data of foreign trade and bank reporting, “affected export receivables upwards and import payables downwards,” according to a research note by central bank experts.
The bank introduced also a distinction according to maturity between the short- and long-term deposits of nonresidents in Turkey, which were all assumed to be short-term thus far. As a result, long-term deposits — those with maturity of above one year — were excluded from the short-term external debt table. In another revision, foreign funds obtained through repossession are now recorded as loan obligations for banks.
The revisions bettered Turkey’s net international investment position, which shows the gap between the country’s total assets and total liabilities, and narrowed the real sector’s foreign-exchange deficit.
