Turkish companies’ foreign debt grew 10% in 2017

The foreign debt of Turkish companies increased by 10 percent last year to $238.9 billion and $70.2 billion of the principle is due in 2018, according to central bank figures.

The debt grew from $216.7 billion in 2016, central bank data published on Monday showed. The biggest increase was in short-term debt, which expanded 28 percent to $18.3 billion.

Some Turkish companies such as national landline operator Turk Telekom have run into problems re-paying foreign credits after the lira slumped against the dollar since the financial crisis and ratings agencies cut the nation’s sovereign debt to junk, prompting downgrades of other types of borrowing. Economists cite the liabilities as a major weakness for the economy.

Of long-term loans totalling $220.6 billion, 59 percent were denominated in dollars, 35 percent in euros, with the remainder in other currencies. Forty-eight percent of short-term lending was in dollars, the central bank said.

The lira is expected to weaken to 4.09 per dollar by the end of this year and to 4.3 by June 2019 from 3.76 on Monday, according to futures quotes provided by CME Group. The currency hit an all-time low of 3.98 to the dollar in November.