Turkey’s foreign debt repayments and the financing of its current account deficit will require at least $200 billion this year, threatening to push up borrowing costs and disrupt the recent gains of the battered Turkish lira unless Ankara rebuilds its credibility among financiers and investors.

The amount of Turkish external debt due to mature over 12 months stood at some $189 billion at the end of 2020, representing 43.4% of the country’s $435 billion external debt stock, according to central bank data released Feb. 18. The foreign debt stock, meanwhile, has come to account for nearly 60% of Turkey’s gross domestic product under the impact of economic downturn since 2018, fueled by the severe depreciation of the Turkish lira. The rollover of foreign debt has already strained Turkey in recent years, forcing it to borrow on higher interest rates.

Turkey needs foreign monies also to finance its current account deficit, which is likely to hit $15 billion this year. 

The country had posted a current account surplus of about $7 billion in 2019 as economic growth slowed to 1% and imports decreased. The economic blows of the COVID-19 pandemic, however, led to a deficit of nearly $37 billion last year, according to central bank figures. Though the growth rate for 2020 has yet to be officially released, estimates put it at 2% — a rate that makes the current account gap even more staggering. A key factor expanding the deficit was the huge increase in gold imports, which rose to $25 billion last year from $11 billion in 2019 as gold became a prime safe haven for savings amid the turmoil of the pandemic and Turkey’s own currency crisis.