FOREIGN DEBT ROLL-OVER DURING CRISES
(TURKISH EXPERIENCE)
Ayla ÞENEL (Central Bank of the Republic of Turkey)
Recurrent financial crises in some of the developing countries have increased
the importance of structuring a foreign debt roll-over mechanism in line with
the international consensus on monitoring short term capital flows to these
countries and involving the private creditors in the resolution of financial
crises.
In most of the crises, initiating debtor-creditor meetings as well as establishing
a Debt Monitoring System (DMS) in the context of IMF supported adjustment programs,
IMF has played a crucial role in debt roll-over arrangements.
Turkey, have encountered a financial crisis in November 2000 by a recurrence
in February 2001 and like other crisis countries, called for roll-over of its
banking sector external debt. Two consecutive foreign debt roll-over arrangements
in 2000 and 2001 have produced no positive outcome. As of the end of May 2002
foreign interbank liabilities of Turkish banks have shrinked by 50% comparing
with December 2000 level.
In this paper I will discuss the main domestic and external factors leading
to unsuccessful interbank debt roll-over experience of Turkey with the purpose
of contributing to the efforts of structuring an operational debt roll-over
framework for the countries facing with financial crises.
