(Bloomberg) — Turkish non-financial companies borrowed a record amount from overseas in May, helping finance the country’s current-account gap while the pandemic was taking its toll on the economy.
Turkish Current-Account Gap Widens Over Pandemic Lockdowns
Firms excluding banks borrowed a gross $7.98 billion, the highest amount ever, according to balance of payments data going back to 1984.
Net borrowing when repayments were deducted stood at $3.57 billion, the highest since June 2008.
Friday’s release by the central bank showed Turkish companies led the financing of the deficit in the current account — the broadest measure of foreign trade in goods and services. The monthly gross borrowing was more than six times the preceding year’s average and allowed Turkey to boost official reserves by $1.3 billion.
“Corporates’ external borrowing in May was exceptionally high, easing the pressure on foreign reserves” and the lira’s value against the dollar, Barclays economist Ercan Erguzel wrote in a report published Friday. “But that may not prevail” in the second half of the year.
The central bank declined to comment when asked to identify which firms did the bulk of the borrowing.
Turkey’s current account remained in deficit for a 19th month as strict lockdowns in May hit economic activity. The gap was $3.08 billion, compared with $1.7 billion in April and $4 billion a year earlier.
©2021 Bloomberg L.P.