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Erdogan administration candidate. Considering Turkey’s budget performance in the first half, and with the debt rollover ratio “well above the targets, it’s not a surprise that the authorities are now signalling a change in the guidance,” Inan Demir, an economist at Nomura International in London, was quoted as saying by the news agency. The rollover ratio would have to be at 90% in the second half to bring it to 110% for the full year, he also noted, adding that it “is not impossible but would require improvement in revenue performance, some of which may come from the transfer of past central bank profits, and/or stricter spending discipline”.
To meet the new rollover goal, the Treasury would need to put the brake on domestic borrowing in the second half of the year. It raised Turkish lira (TRY) 103.1bn ($18.3bn) through the end of June, 45% more than targeted under its borrowing strategy. The ratio stood at 130% as of end-June.
The budget deficit, meanwhile, seems set to exceed the target of 1.8% of gross domestic product and may reach as high as 2.8%, the people who served as sources for the article said. The government would likely pass a law in October to push up its debt limits, they reportedly added.
6.1.2 Budget dynamics - privatization
Turkish conglomerate Dogan Sirketler Grubu Holding has dismissed media reports suggesting that it plans to take part in a concession tender to be held for the country’s national lottery, Milli Piyango. However, it said that Dogan-Online, which is active in the sports betting sector, is considering placing a bid in the tender. Dogan Holding added that Dogan-Online is not part of the group and it does not have a stake in this company. According to Reuters, members of the Dogan family make up the shareholders in Dogan- Online. Shares in Dogan Holding closed the day 1.68% lower. The head of Turkey’s Wealth Fund (TVF) announced in May this year that bids for the operating rights of the national lottery would be received in June. It said the tender process would be completed by the end of the year. Last month, Bloomberg reported that TVF had hired consultancy Ernst & Young to advise on the privatisation. However, TVF has not yet invited bids. A previous auction for Milli Piyango was held in 2014, when a consortium of Net Holding’s Net Sans and Hitay placed the highest bid of $2.76bn for a licence to operate the lottery for 10 years. However, the consortium failed to sign the final agreement by the deadline and the privatisation administration invited the second-best bidder—ERG-Ahlatci—to sign the concession agreement. ERG-Ahlatci, which offered to pay $2.75bn for the licence, did not make the payment by the December 2015 deadline and the tender was subsequently cancelled.
TVF, with assets worth $50bn, was set up in 2016 to develop and increase the value of Turkey’s strategic assets. It has stakes in major Turkish companies including flag carrier Turkish Airlines, several big banks and Turk Telekom.
6.2 Debt
TURKEY -DEBT
2013
2014
2015
2016
2017
2018
H1/19
Budget: gross debt (LC bn)
586
613
678
760
876
1,067
1,220
Budget: gross debt (% GDP)
32.4
30.0
29.0
29.1
28.2
28.8
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36 TURKEY Country Report August 2019 www.intellinews.com