Treasury saves YTL 600 million on lower interest rates
Posted by meb at September 4th, 2008
The Turkish Treasury saved YTL 600 million as interest rates dropped by 3 percentage points in August amidst more positive markets following a Constitutional Court decision to refrain from banning the ruling Justice and Development Party (AK Party).
The Treasury borrowed less in August as compound interest rates fell from an average of 21.6 percent to 18.8 percent as a result of a significant drop in economic risks from domestic political disruptions.
This decline in risk is expected to ease the burden on the domestic market further. According to the national borrowing strategy formulated and continually updated by the Treasury, YTL 15.9 billion of debt payment, including domestic and external debt, will be made in September and October. In a recent report the Treasury said it had planned for a total of YTL 149.7 billion in debt service for 2008 and that YTL 82.2 billion had already been paid by the end of July.
The Treasury will pay off YTL 5.1 billion to the domestic market in September and YTL 8.6 billion in October. It is planning to borrow YTL 3.2 billion from the domestic markets in September and another YTL 6.4 billion in October for these payments.
The closure case against the AK Party had resulted in $2.5 billion in direct losses for the Treasury. A one point increase in interest rates brings about an extra YTL 4 billion cost.
Mehmet Şimşek, the minister of state for the Treasury, has estimated that the total cost of the case to the Treasury, taking into consideration indirect losses, amounted to YTL 20 billion in extra payments. He had said before the verdict that investment inflow and consumer spending would drop due to internal political instability.
Compounded interest rates
Month Rate (%)
Aug 07 18,6
Sep 18,3
Oct 16,4
Nov 16,2
Dec 16,5
Jan 08 16,2
Feb 16,7
Mar 17,5
Apr 18,3
May 18,8
June 20,7
July 21,6
Aug 18,8
source: Today’s Zaman
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