Interest surpasses principal: Treasury debt at record levels!

According to data from Turkey's Ministry of Treasury and Finance, central government interest expenses reached 1 trillion 98.3 billion TL in 2024, surpassing principal payments. This is the first time this has occurred since 2000. A similar trend was observed in the first four months of 2025; while principal payments were 397 billion TL, interest payments reached 724.6 billion TL. As of April, the central government's gross debt stock exceeded 10.7 trillion lira.

RISE IN BORROWING COSTS

According to a report by Sözcü, the political uncertainty that began on March 19 has increased the Treasury's borrowing costs. Prof. Dr. Binhan Elif Yılmaz from Istanbul University stated that the Treasury has been borrowing at higher costs during this period. Emphasizing that the average compound interest rate in the government bond auctions held on April 7 and May 8 exceeded 47 percent, Yılmaz noted that this rate is 10 points higher than the period when the Central Bank began interest rate cuts. Yılmaz said that the fact that interest payments are trending above principal payments increases the domestic debt rollover ratio and leads the Treasury to turn toward more domestic borrowing.

While debt interest expenses averaged 155 billion TL in the first three months of 2025, this figure reached 260.7 billion TL in April. Prof. Dr. Yılmaz stated that in April, 23 percent of budget expenditures and 33 percent of tax revenues were allocated to debt interest, noting that this situation marks a return to levels seen during the 2008 global crisis.