Turkey A Strategy for Managing Debt, Borrowings, and Transfers Under Macroeconomic Adjustment

Developing countries facing a debt burden have had to cope with issues of both external and internal adjustment. This study on Turkey examines both external and domestic debt aspects in the context of a macroeconomic adjustment effort that started nearly ten years ago. The study analyzes how Turkey, after undergoing a major rescheduling in 1978-82, has been able to re-establish market access and to obtain significant amounts of voluntary new money from international commercial sources, a feat which few developing countries outside of Asia have achieved. It is a task that other countries will face over the coming years. How Turkey was able to sequence this and to penetrate various markets is a subject of broad interest. Overall, the study analyzes the transfer problem in Turkey -- the external transfer that needs to be made to foreign creditors and the necessary internal transfer from the private to the public sector. The internal transfer problem arises because most of the external debt is held in the public sector, which therefore needs to service the debt.