AKP got into a debt trap – Last Minute Economic News

As official figures regarding the state’s internal and external debt are announced, it becomes clear how deep the economic problems in the country have become. The Treasury’s domestic and external debt stock increased by 258 billion lira in February compared to the previous month and exceeded the 7 trillion lira limit for the first time. It reached 7 trillion 238 billion lira. 6.9 trillion lira of this was realized during the AKP period. The total debt, which was 1.8 trillion lira in 2020, increased to 4 trillion lira in 2022 and 6.7 trillion lira by the end of 2023. It exceeded 7.2 trillion in the first two months of this year. CHP Manisa Deputy and member of the Grand National Assembly of Turkey Planning and Budget Commission Vehbi Bakırlıoğlu pointed out that the state’s debt has quadrupled in 4 years. Pointing out that the domestic debt stock increased by 74.4 billion lira and the external debt stock increased by 184 billion lira in February alone, Bakırlıoğlu continued as follows:

“230 billion lira of the 515 billion lira increase in the debt stock in 2023 is due to the increase in the exchange rate. Foreign debt stock in dollar terms increased by 2.7 billion dollars to 121.8 billion dollars. There is a serious increase not only due to borrowings but also due to high interest rates and exchange rate increases. Last year, the interest burden of the domestic debt stock exceeded the principal debt. In other words, the amount of interest to be paid on the debt is more than the principal of the debt. The interest burden that must be paid until the maturity of the domestic debt stock, which was 3 trillion 440 billion liras as of the end of February, has exceeded the limit of 5 trillion liras. This means that for every 100 lira of Treasury’s debt, there was an interest burden of 146 lira. 63.5 percent of the Treasury’s total debt stock consists of debts to be paid in foreign currency. Another problem is foreign currency borrowings. “The entire external debt stock and 23.2 percent of the domestic debt stock consists of foreign currency debts.”

Bakırlıoğlu pointed out that due to this high share of foreign currency in the stock, the debt stock grew uncontrollably due to the exchange rate difference. Pointing out that when the exchange rate, inflation and interest rates increase, the interest burden of the Treasury’s debt stock also increases exponentially, Bakırlıoğlu said:

“In other words, the state has to borrow again in order to pay the installments of its due debt. You don’t need to be an economist to see this. If we tell this to any citizen on the street, they will say ‘AKP has ruined the country’. The country is no different from the citizens who are currently stuck in credit card debt. The country is in a very serious impasse.

The Treasury has to constantly borrow to cover the budget deficit. This debt will increase exponentially next year. The AKP government has put the country in a serious debt trap. This is the result of wrong economic policies and low interest stubbornness. It is no longer possible to save the country from this trouble. The ballot box is in front of us. It is time to show the government a red card. “The citizen will show the first red card on March 31.”