Turkish banks’ short-term external debt set to decline in 2026: Fitch
ISTANBUL
Turkish banks’ short-term external debt remains high but is set to begin to decline in 2026 on longer tenor issuance, Fitch Ratings has said in a report.
Refinancing risks have eased amid consistently tight monetary policy and improved investor sentiment, though sensitivity to policy signaling and domestic politics remains high, according to the report.
Dollarization rose on foreign currency demand after March and on the FX-protected deposits phase-out but remains below historical peaks, said Fitch.
Banks’ external debt rose by $7 billion in the first half of 2025 versus a $17 billion rise in 2024, the report noted. “Short-term external debt, maturing within 12 months, was stable at $102 billion at the end of the first half, reflecting higher long-term issuance and repayment of shorter tenors,” it added.
“Any policy reversal would be likely to reignite stability risks, FC demand and liquidity pressures given high external funding and dollarization, but this is not Fitch’s base case,” said the report.
