EXTERNAL DEBTS SUSTAINABILITY, IMF POLICIES EFFECT AND TURKEY SAMPLE

It is generally recognized that developing countries need substantial amounts of net transfer of resources at early stages of development in order to close their savings and foreign exchange gaps. External3 borrowing is a core element in nearly all developing countries’ development strategies. Forei...

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Bibliographic Details
Published in:Lex et scientia 2008, Vol.XV (2), p.136-149
Main Authors: Erzurumlu, Yaman O, Çelik, Faik
Format: Article
Language:English
Subjects:
Debt restructuring
Debt service
Developing countries
Economy
External debt
Global economy
Globalization
LDCs
Loans
Policies
Solvency
Sustainability
Sustainable development
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Summary:It is generally recognized that developing countries need substantial amounts of net transfer of resources at early stages of development in order to close their savings and foreign exchange gaps. External3 borrowing is a core element in nearly all developing countries’ development strategies. Foreign loans can be used to finance public spending aimed at increasing growth, development, and security. Debt sustainability and holding the debt burden at a reasonable level are the two main cornerstones of achieving macroeconomic stability. Solvency is derived from the intertemporal budget constraint which shows sustainability of current policies. Generally, when the expected value of the future resources devoted to debt service equals the current debt stock, solvency condition is satisfied. Developing countries' debt is external debt incurred by Third World countries, generally in quantities beyond that country's ability to repay. Unpayable debt is a term used to describe external debt where the interest on the debt exceeds the amount that the country produces, thus preventing the debt ever being repaid. IMF’ policies through to the World Economy have been changed in the globalization processes. Those policies have been applied in different countries When Turkish economy is taken into consideration it is seen that; it has high debt stocks, the need of external debt continues to increase and the external debt indicators give rise to the anxieties about the issue of external debt sustainability. This paper responds to take forward on external debt-related vulnerabilities and balance sheet risks.
ISSN:1583-039X
2066-1886