Treasury to pay more in interest than principal: 'They have mortgaged the future'
As Turkey's debt burden continues to rise at the end of 2024, the Treasury Financing Program planned for 2025 projects interest payments exceeding the principal. While the maturity of domestic borrowing is shortening, costs continue to rise.
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The 2025 Treasury Financing Program, announced by the Ministry of Treasury and Finance, has revealed striking data regarding the debt and interest burden projected for next year. According to the program, prepared with projections from the Medium-Term Program and the Central Government Budget, the Treasury will pay more in interest than in principal in 2025.
The average maturity of cash domestic borrowing, which was 65.1 months last year, fell to 48.6 months in the January-October period of 2024. This indicates a shortening of 16.5 months in borrowing maturity. As of the end of the year, the Treasury is expected to make a total debt payment of 2 trillion 252 billion TL, consisting of 1 trillion 72.3 billion TL in principal and 1 trillion 180 billion TL in interest.
For 2025, a total payment of 3 trillion 241.9 billion TL is projected, consisting of 1 trillion 373.2 billion TL in principal and 1 trillion 868.7 billion TL in interest. Of this debt, 2 trillion 385 billion TL is expected to be domestic debt, and 856.9 billion TL is expected to be external debt.
WE ARE ON THE WRONG TRACK IN THE FIGHT AGAINST INFLATION
Economist Prof. Dr. Mehmet Şişman evaluated the fact that the interest burden exceeds the principal and the shortening of maturity as a negative development. Şişman said, "Financing costs are rising. The average domestic borrowing interest rate has increased by more than 15 percent compared to last year. As long as the rate of increase in inflation does not fall, this picture will not change. The rise in domestic borrowing costs shows that the fight against inflation is not on the right track." Şişman stated that if inflation continues to remain high, domestic borrowing costs will also remain high.
'THEY HAVE MORTGAGED THE FUTURE'
Economist Cevdet Akçay reacted to Vice President Cevdet Yılmaz's description of the budget as an "investment budget" during the 2025 Central Government Budget presentation. Akçay said, "The 2025 budget has an interest expense of 1 trillion 950 billion TL, and the increasing debt burden is putting the economy in a difficult position. The government is mortgaging the country's future by increasing the debt burden with shortsighted policies." Akçay emphasized that borrowing has become unsustainable and that this situation will strain the economy.