J.P. Morgan: Turkey has to Address $179 Billion Debt by July 2019

Turkey has to deal with $179 billion external debt that is almost equal to a quarter of its annual economic output, according to an estimate by J.P. Morgan reported on Wednesday.

Most of the debt, or $146 billion, is owed by the private sector, including Turkish banks. At the same time, the Turkish government needs to either repay or roll over $4.3 billion. The rest is accounted for by public entities.

The debt issue became alarming, as the Turkish currency lost nearly 40 percent of its value against the dollar this year. It transpired after the political crisis spilled over into the monetary policy pushing up inflation and pressuring companies and individuals who have loans in foreign currency.

The economic crisis hit Turkey after Presidents Donald Trump and Recep Tayyip Erdogan got into a dispute over the release of U.S. pastor Andrew Brunson who is under house arrest in Turkey, an incident followed with more sanctions and tariffs.

On Wednesday, the Turkish lira tumbled to its lowest value against the U.S. dollar in two weeks, despite Ankara’s attempts to reassure investors, after Moody’s downgraded its credit ratings on 20 Turkish financial institutions.