Along with the intensification of the global crisis, i.e. around the beginning of fourth quarter of 2008, to negative developments frightened Turkey: Fall in exports and tightening of external funding facilities. The impact they are to make was obvious: lower production, higher unemployment rate.

In a panel discussion I participated this week, a spokesman stated that the export figures validated these negative expectations though the same cannot be said for external funding facilities. Table 1 gives total net external borrowing of the corporate sector (i.e. borrowing minus repayment), new long term external loan accessed (use), external loan repayment and rollover rates. The total amount in the first column includes net short term borrowing. Long term loan rollover rate given in the last column is found dividing the new borrowing amount (use) by repayment.

It is seen that the loan rollover rate for the corporate sector is around 85 percent within the last four months. It is obvious that there is no significant pressure on domestic FX markets. 'Repayment' column of the table shows that within the last four months, corporate sector has repaid external loans of around 10 billion USD. For instance, if 25 rather than 85 percent of this amount were covered by new external funds, domestic FX demand would naturally go up.

There is no problem up to this point. But, yes again a 'but', the fear mentioned at the beginning was about growth rate. Our concern was the dearth/abundance of resources corporate sector will use to make investments or as working capital.

In this context, the main problem that will not leave the agenda for a certain while is discovered instantly. Case 1: I have 100 Dollars of debt repayment, I obtained new loan of 120 Dollars. Case 2: I have 1000 Dollars of debt repayment, I obtained new loan of 1200 Dollars. Rollover rate is same for both cases: 120 percent. So, under which case I receive higher amount of foreign loans?

In short, it is wise to examine the amounts as well as rates. In this regard, the negative course of affairs is discovered. Each month in 2007, corporate sector obtained new external funding 2.16 billion dollars above the amount necessary to cover the repayments due. This is valid not only for 2007. Though not as high as in 2007, new external funding of considerable amounts has flowed in Turkey. Now, we do not have such opportunity.

To complement Table 1, Table 2 gives the same data for banking sector. Different from the corporate sector, rollover rate for the banking sector has decreased significantly within the last three months. It is obvious that this fall will manifest itself as the decrease in domestic resources to be provided for the corporate sector.

We have to ask this question more frequently: How Turkey, which does not have sufficient domestic savings and needs external resources to sustain higher growth rates, will access the required resources given that the amount of external resources will not remain at earlier levels (even if the global crisis ends)? In short, it is a vicious circle ending at structural problems and the micro reforms required to solve them.

This commentary was published in Radikal daily on 19.04.2009