Global Crisis: Analyzing the Turkish Case from the Perspective of Foreign Debt and Current Account Deficit

Besides foreign funds have some positive impacts on economies at the first stage, it causes transfers of the domestic resources outside of the country and, when the debts reach such an amount to too high to pay back at the maturity it can take the country to debt crisis. On the other hand, if these funds do not used effectively and in the productive areas then the debts are paid by the other debts, this causes increasingly growing debt problem, and with the impacts of the globalization, the problem spreads to an international level. When taking into account foreign debts together with current account deficit problems which create fragility in the domestic financial system, to minimize the negativeness of the continuing global crisis into economy, in addition to the money and fiscal policies, it must be given importance to structural measures in Turkey. To manage this it is primarily important that the funds handled outside must be redirected to productive and creative areas, the structure dependent to importation in the production be changed in time, taking into account the reality of financing the current account deficit mostly with short term funds and portfolio investments from the year 2008, to prevent to face with probable maturity and liquidity problems, be enhanced fixed capital investments.