A month in surplus, a year in deficit
Türkiye's current account posted a $36 million surplus in July. On annualised figures the deficit is $40.7 billion and the balance-of-payments trade deficit $77.2 billion. Most of the gap between them is closed by a $63.5 billion services surplus.[1]
Net inflows from the services balance cluster in the busiest travel and transport months of the year. The $25.2 billion deficit in the primary income balance does not move with the season; that item carries the standing cost of interest and profit transfers paid abroad.[1]
Who funds the gap
Financing of the annualised deficit came from loans of $50.9 billion, net portfolio investment of $6 billion and trade credits of $400 million. Pulling the other way were net direct investment at $300 million, financial derivatives at $5.1 billion and net currency and deposits at $22.5 billion.[1]
Loans and portfolio inflows close the deficit with an obligation that carries a maturity: a loan is repaid, a portfolio inflow can leave, and direct investment, which is permanent capital, sits here on the negative side. An alternative reading is possible; if the loans consist of long-dated debt rolled over as a matter of routine, then together with the $63.5 billion services surplus the rollover can become an ordinary transaction. The distinguishing question is the maturity of the inflow and whose balance sheet it sits on.[1]
The threshold to watch
In the July data the general government made a net repayment of $130 million on external loan drawings, while banks and other sectors kept borrowing. Over the same period the central bank's net decline in foreign currency reserves was $31.5 billion.[1]
That yields a threshold you can watch. If net portfolio inflows turn negative on a monthly basis, the monthly change in official reserves will turn negative as well, because the rollover burden shifts onto the balance sheets of banks and companies. Reading those two series side by side shows how comfortable a debt-financed balance really is.[1]