IV Balance Sheet Developments Since the Crisis
Author: Mr. Christian Keller and Mr. Chris Lane
Language:
English
Keywords:
OP; debt; foreign currency; bank; foreign currency assets; liquidity risk; lira assets; needs of bank; position of household; Bank deposits; Foreign currency debt; Foreign currency exposure
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Abstract

Following what is called a “balance sheet approach,” this chapter assesses the effect of the 2001 crisis on Turkey’s main economic sectors, the role those sectors played in resolving the crisis, and how they have developed since then. The approach, which is described by Allen and others (2002),1 focuses on currency and maturity mismatches in the economy’s main sectors and the links between these sectors. Other balance sheet aspects such as the capital structure and off–balance sheet activities are also taken into account to the extent that information is available.

Following what is called a “balance sheet approach,” this chapter assesses the effect of the 2001 crisis on Turkey’s main economic sectors, the role those sectors played in resolving the crisis, and how they have developed since then. The approach, which is described by Allen and others (2002),1 focuses on currency and maturity mismatches in the economy’s main sectors and the links between these sectors. Other balance sheet aspects such as the capital structure and off–balance sheet activities are also taken into account to the extent that information is available.

Turkey’s 2000–01 financial crisis affected balance sheets throughout the economy. The sharp depreciation that followed the floating of the Turkish lira in February 2001, inflicted heavy net worth losses on balance sheets with large currency mismatches (foreign currency liabilities vs. lira assets). Similarly, the related hike in real interest rates caused financial losses for those who had a maturity mismatch (short-term liabilities vs. long-term assets). Indeed, many banks became insolvent in 2001 as their balance sheets combined large maturity mismatches with large open foreign currency positions. While the crisis initially manifested itself in the banking sector, the related asset price corrections affected balance sheets in all sectors of the economy: the government, banks, corporations, and households.

The resolution of the crisis after mid-2001 brought significant shifts in the sectoral asset-liability positions—mainly transferring risks to the government. To resolve the banking crisis, the government issued bonds with a maturity, interest rate, and currency structure that improved the risk exposure of banks’ balance sheets. At the same time, the government used official external financing to provide foreign currency liquidity to the market, as the crisis forced banks and corporations to sharply reduce their outstanding external liabilities. Overall, these transactions meant a reallocation of risks from private balance sheets to those of the government.

The economic recovery in 2002–03 supported a general strengthening of balance sheets. However, certain vulnerabilities remain. Against the backdrop of strong growth, rapid disinflation, and the related improvement in market sentiment, balance sheets in all sectors showed signs of strengthening over 2002 and 2003. That said, some of the vulnerabilities that resulted from the crisis—particularly the level and composition of public debt, and some vulnerabilities that stem from longer-term developments over the past, such as the high level of dollarization in the economy—will require more time to improve.

This chapter first examines how the crisis has impacted Turkey’s asset-liability position vis-à-vis nonresidents for the country as a whole and the three main sectors: banks, government (including the central bank), and the real sector (households and corporations). Second, because a large portion of domestic liabilities is denominated in foreign currency, there is more detailed analysis of the potential currency and maturity mismatches in each of these sectors. The chapter then highlights the key financial links between the sectors and the vulnerabilities associated with these links. Finally, some policies that could contribute to further strengthening of balance sheets are sketched out.

The Effect of Crisis and Recovery on External Assets and Liabilities

The 2001 crisis temporarily cut Turkey’s overall net indebtedness vis-à-vis the rest of the world. But at the sectoral level, the government increased its net external indebtedness, while the banking and the real sectors reduced theirs. At the same time, repayments of short-term external debt over 2001–02, and the accumulation of reserves, led to an improvement of the short-term external asset-liability position of all sectors.

Turkey’s net claims on the rest of the world—its international investment position (IIP)—temporarily improved as a result of the 2001 crisis. Key factors in the improvement were the net repayment of external debt (net capital outflow) and, owing to the devaluation, a reduction in the dollar value of foreign investors’ equity position (principally foreign direct investment) in Turkey. The subsequent deterioration reflected a reversal of the capital outflow as well as an upward revaluation of equity assets.

The crisis and the policies to resolve it resulted in major shifts within the country’s IIP—improving the banking and real sectors, while weakening the government sector. Turkey’s open capital account has long facilitated the extensive use of foreign credit in all sectors. The crawling peg regime adopted in 1999, coupled with high domestic interest rates, further raised incentives for banks and corporations to run large negative IIPs. When the sustainability of the exchange rate peg was called into question, foreign creditors reduced the rollover of their credit, forcing a reduction of the external debt of banks and corporations. To address the risk of widespread banking and corporate default, the government sector responded by (i) selling foreign exchange to the market, (ii) swapping lira paper held by banks for foreign currency-linked bonds, (iii) issuing recapitalization bonds to banks, and (iv) introducing a deposit guarantee. To have the necessary foreign currency liquidity to support these actions, the government borrowed substantially from (official) external creditors. Thus, while the IIP of banks and corporations improved, that of the public sector worsened (Figure 4.1).

Figure 4.1.
Figure 4.1.

International Investment Position by Sector

(Net claims on the rest of the world, in billions of U.S. dollars)

Source: Central Bank of Turkey.

The shift across the sectors’ short-term IIPs was even more marked. During the crisis, the government sector lost most of its liquid foreign assets (mainly reserves), which worsened the gap between liquid foreign assets and short-term foreign liabilities. In contrast, both banks and corporations built a positive short-term IIP: the foreign credit they lost had been mostly short term, and at the same time, they accumulated liquid foreign assets as part of a strengthening of the current account. However, by 2002, the public sector position had also begun to strengthen markedly as the need for foreign exchange intervention ended and longer-term finance from the International Monetary Fund bolstered reserves (Figure 4.2).

Figure 4.2.
Figure 4.2.

Short-Term International Investment Position by Sector

(Short-term net claims on the rest of the world, in billions of U.S. dollars)

Source: Central Bank of Turkey.

However, given the extensive dollarization of domestic liabilities in Turkey, foreign assets and liabilities are only a part of the foreign currency risk in each sector. In total, more than half of all debt liabilities in Turkey, including those between residents, are denominated in foreign currency. This so-called domestic liability dollarization can substantially affect a sector’s overall foreign currency exposure beyond the position it has vis-à-vis nonresidents.2 For example, despite the positive short-term IIP described above, the banking sector still has a large mismatch between its short-term foreign currency assets and liabilities because of the large share of residents’ foreign currency deposits. Similarly, foreign currency-denominated loans received from domestic banks can substantially add to the foreign currency liabilities of corporations. Although these liabilities among residents in principle net out when aggregated on the country level (the IIP for Turkey as a whole), they can still cause distress in sectoral balance sheets and be a source of economic disruption (Table 4.1 and Figure 4.3).

Table 4.1.

Extent of Liability Dollarization in Turkey’s Economy, end-2003

(In billions of U.S. dollars)

article image
Source: IMF staff calculations based on data from the Banking Regulation and Supervision Agency and the Central Bank.

The real sector’s total debt is the sum of its external debt and its credit from domestic banks.

Figure 4.3.
Figure 4.3.

Foreign Currency Share in Total Debt, end-2002

(In percent)

Source: IMF staff calculations and estimates presented in Goldstein and Turner (2004).Note: Includes foreign currency-denominated domestic debt.

Resolution of the Crisis and Recovery of Balance Sheets in Each Sector

Banking Sector

Large foreign currency mismatches combined with significant maturity mismatches had been a key weakness that contributed to the crisis many banks experienced in 2001. With bonds provided by the government, banks have since been able to recapitalize and reduce their currency and interest rate exposure. However, some vulnerabilities associated with the high share of foreign currency deposits remain, and banks are also highly exposed to government assets.

The foreign currency mismatch in the banking sector has been dramatically reduced since the crisis.3 The banking sector’s open foreign currency position, including forwards, was reduced from more than $5 billion at end-2000 (40 percent of total shareholder equity including profits) to a slightly positive position by end-2003.4 This adjustment, which greatly reduces the sector’s exchange rate risk, was the result of three main developments:

  • Banks repaid their foreign interbank credit lines during the crisis. Short-term credit from foreign banks fell from almost $17 billion in 2000 to $8 billion in 2001, which translated into an improvement in the on-balance sheet foreign currency position (excluding foreign currency-indexed assets) of about $7 billion.

  • Foreign currency-indexed assets jumped from $3.5 billion in 2000 to $8.6 billion in 2001, which was mainly the result of a swap of about $5 billion worth of lira-denominated government debt to dollar-linked bonds in June 2001. This reduced the gap between foreign currency assets and liabilities to $1.6 billion.

  • Owing to these two drastic improvements in their on-balance sheet position, banks were able to wind down their very large long-forward position—from over $9 billion in 2000 to only about $1.5 billion in 2001—and still reduce their overall currency mismatch to just a little above $100 million (Table 4.2).5

Table 4.2.

Foreign Currency Mismatch in the Banking Sector

(In billions of U.S. dollars)

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Source: IMF staff calculations based on data from the Banking Regulation and Supervision Agency and the Central Bank of Turkey.

With the maturity of deposits remaining very short, banks continue to have a significant maturity mismatch, to a large extent in foreign currency. The banking system did not experience deposit flight during the crisis; in fact, foreign currency deposits continued to increase in 2001. The maturity of deposits, however, has not lengthened significantly despite the resolution of the crisis. The average maturity of less than three months is still very short for both lira and foreign currency deposits. The comparatively longer maturities of the banking sector’s assets (both government securities and private sector loans) create a substantial maturity mismatch on bank balance sheets. The issuance of floating rate notes by the government has allowed banks to reduce some of the interest rate risk associated with the maturity gap between deposits and assets.6 However, the foreign currency liquidity risk resulting from the large share of short-term foreign currency deposits remains substantial (Figures 4.4 and 4.5).

Figure 4.4.
Figure 4.4.

Deposits in the Banking Sector

(In billions of U.S. dollars)

Figure 4.5.
Figure 4.5.

Average Maturity of Deposits

(In months, at year end)

Banks’ liquidity coverage of foreign currency deposits declined during the 2002–03 recovery. Banks generally maintain a higher liquidity coverage for foreign currency deposits than for lira deposits—reflecting the higher risk of intermediating in foreign currency. This coverage has been declining over the past two years, as banks shift out of low-yielding liquid foreign currency assets into longer-term domestic assets with higher yields (such as consumer loans). By end-2003, less than one-third of the $54 billion foreign currency deposits were covered with liquid assets (including banks’ reserves at the Central Bank). This indicates an improvement in the banks’ financial intermediation function and also their profitability, but, as indicated above, it also heightens liquidity and repricing risk (Figures 4.6 and 4.7).

Figure 4.6.
Figure 4.6.

Liquid Assets (including reserves) as a Share of Deposits

(In percent)

Figure 4.7.
Figure 4.7.

Government Securities as a Share of the Banking Sector’s Total Loan and Security Portfolio

(In percent)

Banks’ exposure to government assets has risen sharply as a result of the crisis. The share of government securities in banks’ total portfolios of loans and securities about doubled in 2001, reaching 50 percent by year-end. This was the direct result of the government providing banks with bonds to improve their capitalization, and to the government’s much increased borrowing requirement due to the hike in real interest rates.

Government Sector

During and immediately after the crisis, the government’s balance sheet deteriorated, its debt stock rose, the share of foreign currency debt and floating rate debt increased, maturities shortened, and the net reserve position weakened. Since 2002, with the return of confidence and growth, all of these indicators have begun to improve. But the level and the composition of debt remain a concern.

The most noticeable impact of the crisis on the government’s balance sheet was the jump in debt, which largely reflects its involvement in the recapitalization of banks. First, domestic debt soared in 2001 as a result of the government’s issuance of securities to recapitalize banks (so-called noncash debt). Second, external debt rose, as credit from the International Monetary Fund increased. Third, the depreciation of the exchange rate and the hike in interest rates greatly increased the government’s debt burden (Table 4.3).

Table 4.3.

Gross Government Debt (consolidated budget debt stock)

(In billions of U.S. dollars)

article image
Source: IMF staff calculations based on data from the Banking Regulation and Supervision Agency and the Central Bank of Turkey.

The composition of government debt also worsened during the crisis—yet it recovered somewhat in 2002–03 as market conditions improved. The share of government debt denominated in or indexed to foreign currency rose to nearly 60 percent by end-2002, reflecting the onlending of IMF credit from the Central Bank of Turkey and debt issued for bank recapitalization mainly denominated in foreign currency. Floating interest rate debt increased to nearly 70 percent of total debt in 2001, as fixed rate debt issuance carried very high interest rates. As market conditions improved, floating rate debt and foreign currency debt each declined to just under half the debt stock by 2003, underscoring the continued sensitivity of the debt stock to interest rate and exchange rate changes (Table 4.4).

Table 4.4.

Currency and Interest Rate Composition of Central Government Debt

(In percent of total debt)

article image
Source: IMF staff calculations based on Treasury data.

Including estimates of floating rate foreign currency debt for 2000 and 2001.

The government’s available foreign currency assets fell in 2001 and did not increase enough in 2002–03 to avoid a widening of its currency mismatch. The government’s foreign currency position deteriorated markedly, both on a total and short-term basis. Short-term exposure, measured as net reserves less short-term debt on a remaining maturity basis, recovered in 2002 as maturities lengthened, but rose again at end-2003 owing to the shorter maturity of onlent fund credit and debt swaps due in 2004 (Table 4.5).

Table 4.5.

Foreign Currency Position of the Government Sector

(In billions of U.S. dollars)

article image
Source: Treasury, Central Bank of Turkey, and IMF staff estimates.

External debt plus estimated data for foreign currency indexed and denominated debt with maturity less than one year. Excludes long-term Dresdner deposits with less than one year remaining.

Central Bank net international reserves less short-term foreign currency debt at remaining maturity.

Real Sector

The crisis forced the real sector as a whole (corporations and households) to a positive foreign currency position during 2001, which it largely retained in 2002–03. However, while households in aggregate are largely hedged through their holdings of foreign currency assets, corporations continue to have a high foreign currency mismatch, and the natural hedge from exports appears limited. Also, the equity cushion of corporations remains small and much of their debt is still short term.

The real sector moved to a large positive foreign currency position by end-2001, as foreign and domestic banks cut their (foreign currency) loans. The real sector typically had a large negative position visà-vis nonresidents, reflecting its dependence on external borrowing. At the same time, however, its domestic foreign currency position has been long, because its dollar deposits with domestic banks have been much higher than the amount of dollar loans it receives from these banks (since banks give most of their credit to the government). Taken together, the real sector had a slightly negative foreign currency position at end-2000. During the crisis, both foreign and domestic banks reduced their lending to Turkey’s real sector, while the sector maintained most of its foreign asset holdings and domestic dollar deposits. As a result, the real sector’s overall foreign currency position swung from an $800 million deficit in 2000 to a $9.6 billion surplus in 2001.

While foreign currency borrowing resumed in 2002–03, the real sector also added to its foreign currency assets, thus retaining a positive foreign currency balance. As access to foreign credit was regained and the domestic banking system recovered, the real sector was again able to take on foreign currency debt in 2002 and 2003. In parallel, it also rebuilt its assets abroad, and, in particular, boosted its foreign currency deposits with domestic banks. Thus, overall, the surplus in the real sector’s foreign currency position that had emerged by end-2001 only shrunk by about one-third (to $6.3 billion) in the two years that followed (Table 4.6).

Table 4.6.

Foreign Currency Position of the Real Sector (corporations and households)

(In billions of U.S. dollars)

article image
Source: IMF staff calculations based on data from the Banking Regulation and Supervision Agency and the Central Bank of Turkey.

The data indicate, however, that within the real sector, corporations have a currency mismatch, while households have a large foreign currency surplus. Domestic banking sector data show that corporations’ deposits account for less than one-quarter of foreign currency deposits, while at the same time the corporations receive about three-quarters of the bank loans. Similarly, households are unlikely to issue external debt, while they are likely to hold a significant share of reported foreign assets. Calculations based on this information reveal a large gap between the foreign currency assets and liabilities on the balance sheets of corporations. Given the real sector’s overall surplus, this implies that households have a very large surplus in their foreign currency position (Table 4.7).

Table 4.7.

Foreign Currency Position of the Corporate Sector

(In billions of U.S. dollars)

article image
Source: IMF staff calculations based on data from the Banking Regulation and Supervision Agency and the Central Bank of Turkey.

Assuming that all the external private debt is owed by corporations.

Assuming that half of the foreign assets belongs to households.

Assuming that three-fourths of bank loans are extended to corporations.

Assuming that one-fourth of bank deposits belong to corporations.

Consequently, households in aggregate seem well hedged against exchange rate risk. The long foreign currency position of households can be explained by the fact that they need less foreign currency financing and at the same time still largely substitute lira assets with foreign currency assets. Hence, while an exchange rate depreciation would still reduce the real value of households’ lira wages, it would create a positive wealth effect through their dollar savings.

Corporations have some natural hedge through their ability to generate foreign currency from exports, but this is limited by their need to pay for imported inputs. In contrast to households, whose income is mostly in lira, corporations that produce tradable goods—in the clothing and textiles sector, for example—can generate foreign currency income from exports. This provides them with a natural hedge against currency risk to the extent that an exchange rate depreciation improves their competitiveness and thus boosts exports. The production of export goods, however, often requires the import of input goods, which are not easily substituted with local goods, and for which corporations must pay in foreign currency. Some estimates indicate that one-half to two-thirds of the value of exported goods in Turkey are imported inputs. For 2001 and 2002, for example, this would imply a net inflow of foreign currency receipts from exports (excluding shuttle trade) of between $12 billion and $16 billion, compared to a foreign currency mismatch of between $26 billion and $30 billion.

Although the available aggregate data show some improvement in the capital structure of corporations since the crisis, debt capital still dominates. In most Turkish corporations, debt financing dominates over equity financing. During the 2001 crisis, the average leverage ratio of corporations increased to about 70 percent, equivalent to a debt-to-equity ratio of over 230 percent. However, after returning to its precrisis level in 2002, the leverage ratio improved further in 2003 to about 60 percent (debt-to-equity ratio of 150 percent). Although such levels are not uncommon for emerging market economies, they imply that the equity buffer against balance sheet shocks is still limited in most corporations.

Most of corporate debt still has short maturities, however, which creates a large mismatch between the liquid assets and short-term liabilities of corporations. Two-thirds of the debt financing is short term, and only about one-fourth of these short-term liabilities are covered by liquid assets. Although these ratios clearly improved in 2002–03, they still imply that corporations have a significant exposure to interest rate and rollover risk (Table 4.8).

A look at the 2001 income statements of corporations shows how currency and maturity mismatches can adversely affect their financial health. Sales numbers for corporations in 2001 show a rise in exports parallel to the collapse in the value of domestic sales, thus confirming some natural hedge effect from the exchange rate depreciation. Since the depreciation of the lira also implied a sharp fall in domestic production costs, corporations were even able to maintain their operating profits in 2001. Given their large share of short-term and foreign currency debt, however, the soaring interest rates and the depreciation of the lira created a spike in financing expenses. This turned the operating profits into net losses (Figure 4.8 and Table 4.9).

Table 4.8.

Selected Financial Ratios of the Corporate Sector

(In percent)

article image
Source: Central Bank of Turkey.
Figure 4.8.
Figure 4.8.

Operating and Net Profits of Corporations

(In billions of U.S. dollars)

Table 4.9.

Selected Profitability Ratios of the Corporate Sector

article image
Source: Central Bank of Turkey.

Profits in 2001 were negative, but the profitability ratios are reported as zero.

Main Links Between Sectoral Balance Sheets and Associated Risks

To resolve the crisis, risks were transferred from private sector balance sheets to the balance sheet of the government. As a result, the government sector balance sheet now plays a central role in the possible transmission of shocks. An additional risk stems from the still-high share of foreign currency intermediation by banks, which spreads foreign currency liquidity risk into all sectors of the economy and is only partly cushioned by the official reserve position.

The government strengthened the banking sector balance sheet by increasing the level, and worsening the structure, of its own debt. It issued bonds to recapitalize banks and provided foreign currency assets to the rest of the economy to close open foreign currency positions. Banks and corporations had large short-term foreign currency liabilities, and, at the same time, had either completely lost access to foreign credit or could only obtain it at much shorter maturities and higher costs than the official financing that was available to the government (Figure 4.9).

Figure 4.9.
Figure 4.9.

Domestic Banking Sector’s Claims on Public Sector Assets

(Percent of total assets)

Source: IMF, International Financial Statistics, 2002.

As a result, the government’s balance sheet has now become the linchpin for the rest of the economy. Given the increased exposure of banks’ balance sheets to government assets, the sustainability of government debt and the health of the banking sector are intimately linked. In turn, because of their financial intermediation function, banks have a strong impact on the stability of the real sector.

The banking sector’s lack of funding through lira deposits from the real sector inevitably creates exchange rate or related risks. As shown earlier, households protect their wealth from inflation by converting their mostly lira income into foreign currency assets, mainly in the form of bank deposits. To match the short-term foreign currency liabilities created by these deposits, banks attempt to create domestic foreign currency assets with the government and the real sector: They extend private sector loans and demand government securities that are denominated or indexed in foreign currency. Together, these assets more than matched residents’ foreign currency deposits by end-2003 (Table 4.10). However, by shifting the exchange rate risk to the government and the real sector, banks increase their exposure to credit risk, in that corporations, households, or the government may not be able to serve their foreign currency debt to banks after a sharp exchange rate depreciation; and to market risk, in that, because the security portfolio of banks is marked-to-market, any sudden drop in the price of government securities implies a fall in the banks’ assets.

Table 4.10.

Main Domestic Foreign Currency Assets and Liabilities of the Banking Sector, end-2003

(In billions of U.S. dollars)

article image
Source: IMF staff calculations based on data from the Banking Regulation and Supervision Agency.

The short maturity of most foreign currency liabilities creates a high liquidity risk throughout the economy, which is only in part covered by official reserve assets. Turkey’s total short-term external debt (residual maturity basis) amounted to 119 percent of gross official reserves by end-2003. Yet, this traditional reserve adequacy ratio may not fully capture the economy’s true foreign currency liquidity risk. Indeed, to better gauge the total foreign currency liquidity needs that could emerge in the economy over the short term, it is useful to add the foreign currency deposits of residents and those of domestic banks (net of the banks’ own liquid foreign assets) to the short-term external debt. Measured this way, the potential short-term foreign currency needs add up to over 250 percent of gross reserves. Thus, while gross official reserves are almost high enough to fully cover the economy’s foreign currency needs to repay short-term external debt, they do not suffice to also cover the potential foreign currency liquidity needs of banks, should residents suddenly want to withdraw their dollar deposits from the domestic banking system.

Conclusions and Policy Implications

The balance sheet analysis provides a comprehensive perspective for examining the vulnerabilities in Turkey’s economy. The results can be summarized as follows:

  • Banking sector—Banks’ balance sheets have strengthened significantly since 2001, but they are highly exposed to government assets, and foreign currency liquidity risk will also remain as long as dollar deposits are a main funding source.

  • Government sector—The government’s high and adversely structured debt stock is its main vulnerability. Its ample reserve holdings only partly mitigate the related risks, given the economy’s large potential short-term foreign currency needs.

  • Real sector—The profitability of corporations has recovered, but the combination of short-term foreign currency debt and still-limited equity capital continues to pose a risk. The large foreign currency holdings (in aggregate) of households hedge them against currency risk.

The findings reinforce the existing policy advice regarding a public debt reduction strategy and the management of foreign currency risks. Lower levels of public debt would reduce the vulnerability not only of the government sector but—given the intersectoral links—also of the banking and real sectors. Limiting the share of foreign currency debt, lengthening the maturity of liabilities, and maintaining prudent levels of liquid foreign currency assets are further steps to reduce balance sheet risks. In addition, policies to promote equity financing could help to decrease corporations’ high leverage, which would strengthen their resilience against any type of shock. Continuing trade facilitation will improve the degree to which exports can react to an exchange rate depreciation, thus enabling corporations to better benefit from their natural hedge.

Given the many risks related to domestic liability dollarization, policies that encourage reverse currency substitution are also important. Low inflation and the removal of distortions in financial intermediation should, over the medium term, encourage residents to keep their savings in lira assets. The ability of local banks to fund themselves with lira deposits will allow them to move away from intermediating in foreign currency, which, as shown earlier, lies at the root of the high currency exposure found on balance sheets throughout the economy.

1

The term “balance sheet” is not applied in a strict accounting sense but is used to highlight the focus of the approach on financial asset and liability positions (stocks) in addition to flow variables.

2

The term “foreign currency position” refers to the position including domestic assets and liabilities that are denominated in or indexed to a foreign currency.

3

The banking sector comprises private, state, Savings Deposit Insurance Fund, and foreign and investment banks.

4

Banks’ forward positions are netted out for the purpose of calculating the regulatory limit.

5

The quality of forwards as of end-2000 has been an issue of debate. Many observers believe that the counterparts to these contracts often were corporations that did not have sufficient foreign currency earnings to actually fulfill their obligations had the forwards been called.

6

There is little information on the maturity structure of loans to the private sector. Given the existence of floating rate loans, the maturity and the repricing period might diverge.

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Cover Turkey at the Crossroads
Turkey at the Crossroads
From Crisis Resolution to EU Accession
Author: Mr. Donal McGettigan, Mr. Xavier Debrun, Mr. Mark E Griffiths, Mr. Reza Moghadam, Mr. Ernesto Ramirez Rigo, Mr. Martin Schindler, Mr. Mats A Josefsson, Cheng Hoon Lim, Mr. Christian Keller, Mr. Christoph A Klingen, Mr. Chris Lane, Oya Celasun, Mr. Ashoka Mody, Mr. Dewitt D Marston, and Mathew A. Verghis
ISBN:
9781589063860
ISSN:
0251-6365
Publication Date:
19 Sep 2005
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589063860.084
Pages:
84
  • View in gallery

    International Investment Position by Sector

    (Net claims on the rest of the world, in billions of U.S. dollars)

  • View in gallery

    Short-Term International Investment Position by Sector

    (Short-term net claims on the rest of the world, in billions of U.S. dollars)

  • View in gallery

    Foreign Currency Share in Total Debt, end-2002

    (In percent)

  • View in gallery

    Deposits in the Banking Sector

    (In billions of U.S. dollars)

  • View in gallery

    Average Maturity of Deposits

    (In months, at year end)

  • View in gallery

    Liquid Assets (including reserves) as a Share of Deposits

    (In percent)

  • View in gallery

    Government Securities as a Share of the Banking Sector’s Total Loan and Security Portfolio

    (In percent)

  • View in gallery

    Operating and Net Profits of Corporations

    (In billions of U.S. dollars)

  • View in gallery

    Domestic Banking Sector’s Claims on Public Sector Assets

    (Percent of total assets)

International Investment Position by Sector

(Net claims on the rest of the world, in billions of U.S. dollars)

Short-Term International Investment Position by Sector

(Short-term net claims on the rest of the world, in billions of U.S. dollars)

Foreign Currency Share in Total Debt, end-2002

(In percent)

Deposits in the Banking Sector

(In billions of U.S. dollars)

Average Maturity of Deposits

(In months, at year end)

Liquid Assets (including reserves) as a Share of Deposits

(In percent)

Government Securities as a Share of the Banking Sector’s Total Loan and Security Portfolio

(In percent)

Operating and Net Profits of Corporations

(In billions of U.S. dollars)

Domestic Banking Sector’s Claims on Public Sector Assets

(Percent of total assets)

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