Opposition Lawmaker: Turkey Faces Structural Debt Crisis, Warns of Ponzi Financing

A prominent opposition lawmaker has asserted that Turkey is confronting a structural debt crisis, citing data that shows a dramatic increase in the national debt. Özgür Karabat, a Republican People's Party (CHP) Istanbul lawmaker, stated that the Treasury's total debt stock surged from 243 billion Turkish Lira in 2002 to 14.7 trillion Lira by April 2026. Karabat attributed this escalation to high inflation and uncontrolled borrowing.

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Turkey is facing a structural debt crisis.

Karabat emphasized that 52.3% of Turkey's total debt is denominated in foreign currency, making the Treasury vulnerable to every increase in the exchange rate. He also noted a rise in foreign currency borrowing for domestic debt, which he argued signals a lack of confidence in the national currency by the economic administration. The lawmaker pointed out that the total interest payable on existing debts has reached 11.5 trillion Lira, consuming a significant portion of tax revenues. He cautioned that focusing solely on the debt-to-GDP ratio is misleading, as nominal GDP growth due to high inflation masks the real risks.

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Every increase in the exchange rate brings new burdens to the Treasury.

Drawing parallels with other nations, Karabat mentioned Japan's high debt, which is primarily in its own currency, contrasting it with Argentina and Lebanon, countries that experienced crises due to their foreign currency debts. He warned that Turkey faces similar risks. Karabat further alleged that Treasury guarantees for public-private partnership projects are not fully reflected in official debt figures, suggesting the burden on public finances exceeds reported data. He characterized the current borrowing model as "Ponzi financing" and concluded that unless the situation changes, the economic cost will continue to be borne by society.

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The increase in borrowing in foreign currency for domestic debt shows the economic administration's distrust in its own currency.