Posted by meb at February 11th, 2007

Approximately 45 percent of the $303.1 billion in domestic debt payments by the Treasury between 1995 and 2006 were interest payments.
 Turkey paid interest with variable rates ranging from 6.1 percent to 37.9 percent during those nine years. On average since the economic crisis in 1994, interest rates were an annual 17.6 percent. Had the real interest rate remained at 5 percent, the cost would have been $87 billion less, or $63 billion less at an 8  percent rate, according to a report from the Ankara Chamber of Commerce. The report says that in January the Treasury borrowed with a 20.36 percent interest rate and if inflation would decrease to 4 percent as was targeted, the real interest rate would have been 15.7 percent. The report recalls that IMF programs target the reducing real interest rates to 6-7 percent. Turkey’s domestic debt was $20.8 billion in 1994 compared to $179 billion in 2006. During this period Turkey tried to pay its debts with the primary surplus but sometimes borrowed more to pay previous debts, explaining why the Treasury’s domestic borrowings were 32.4 percent higher than its debt transfers.

source: Today’s Zaman

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