THE UNDERSECRETARIAT OF TREASURY Debt Statistics Compiled under

THE UNDERSECRETARIAT OF TREASURY Debt Statistics Compiled under International Standarts and Transition to SNA 2008 Eylem VAYVADA DERYA Turkish Treasury Directorate General of Public Finance National Seminar on Developing a Program for the Implementation of the 2008 SNA and Supporting Statistics in Turkey 10 September 2013 Ankara, Turkey The Undersecretariat Of Treasury T. C. Başbakanlık Hazine Müsteşarlığı Slide 1

Presentation Plan The Underseretariat of Turkish Treasury’s Debt and Risk Management Policies Debt statistics compiled for international organizations under SNA 93 (ESA 95) New Adjustments Required to Transmit SNA 2008 (ESA 2010) in Current Statistics Things to do for SNA 2008 Transformation in Debt Statistics The Undersecretariat Of Treasury Slide 2

The Underseretariat of Turkish Treasury Mission v to determine the economic policies and in accordance with the policies set; to regulate, to apply, to monitor and to improve the operations below; q q q Treasury operations, Bilateral and multilateral foreign relations, Relations with national and international economic and financial institutions, Lending to and/or borrowing from foreign countries and/or institutions Protecting the value of Turkish currency and regulating the principles of exchange policy q Exercising the ownership functions of the government related with State-Owned Enterprises and monitoring their activities q Drafting, implementing, and monitoring the implementation of insurance legislation q State Aids operations in cooperation with all other economic actors in a transparent, accountable and efficient way. Organisation: 7 Directorate General & Affiliated Units The Undersecretariat Of Treasury Slide 3

The Underseretariat of Turkish Treasury Directorate General of Public Finance Responsible for v Financing the Central Government Budget v Debt Management v Risk Management v Cash Management v Contingent Liabilities and Receivables Management The Undersecretariat Of Treasury Slide 4

Directorate General of Public Finance Debt and Risk Management Policies Principles v Sustainability v Transperency v Accountability v Predictability The Undersecretariat Of Treasury Slide 5

Directorate General of Public Finance Debt and Risk Management Policies Objectives v Maintenance of borrowing policy consistent with monetary and fiscal policies, taking macroeconomic balances into account v Fulfillment of financing requirements at the lowest possible cost in medium-long term in accordance with the levels of risk determined in consideration of domestic and external market conditions and cost factors The Undersecretariat Of Treasury Slide 6

Directorate General of Public Finance Debt and Risk Management Policies Practices ü Borrowing strategies are conducted based on the medium-long term programs while considering the trade-off between cost and risk v Keeping strong cash reserve v Smoothing out the redemption profile v Extending the maturity of borrowing v Issuing mainly fixed rate and TL denominated instruments The Undersecretariat Of Treasury Slide 7

Directorate General of Public Finance Debt and Risk Management Policies Practices ü In order to ensure accountability, transperency and predictability; v Annual & 3 -month financing programs are prepared v Monthly auction calendar is prepared v Annual and monthly debt management reports are prepared and presented to Council of Ministers and public v Planning and Budget Commission of the Parliament is regularly informed about developments in debt management through private meetings. The Undersecretariat Of Treasury Slide 8

Directorate General of Public Finance Debt and Risk Management Policies Practices ü In order to increase the efficiency of the primary and the secondary markets; v Investor relations are developed via regular meetings with primary dealers on a monthly basis within the framework of Primary Dealership System v Regular meetings with local and foreign investors are conducted to broaden the investor base. v Financial instruments are diversified by developing new borrowing instruments. v Efficient yield curve is generated by implementing security benchmarking policy. The Undersecretariat Of Treasury Slide 9

Directorate General of Public Finance Debt and Risk Management Policies Practices ü Risk account was created to manage credit risks which may arise from Treasury guarantees and on-lent foreign debt ü Guarantee fee, partial guarantee and guarantee limit were implemented to manage credit risks ü Technical analyses and reports are conducted in order to control operational risks The Undersecretariat Of Treasury Slide 10

Directorate General of Public Finance Debt and Risk Management Policies Statistics v To maintain the effective functioning and in line with transparency objective, Turkish Treasury compiles and disseminates many public finance statistics via online bulletins and publications. v These statistics are produced along with the national legal framework v Some of the statistics, mainly debt figures, are produced announced according to the «international standards» to enhance the comparability with other economies. The Undersecretariat Of Treasury Slide 11

Debt statistics compiled for international organizations under SNA 93 Central Government Debt for PSD (OECD & Worldbank, PSDS Guide < SNA 2008 & BPM 6) Central Government Debt for SDDS (IMF, SDDS Guide < GFSM 2001) Central Government Stock of Debt Securities (BIS, HSS < SNA 2008) Maastricht Debt for EDP Tables (Eurostat, CR 479/2009 < ESA 95) Government Guaranteed Debt For EDP Questionnaire (Eurostat, CR 479/2009 < ESA 95) Central Government Debt for GFS Tables (IMF, GFS Manual 2001 < SNA 93) Gross external debt of Turkey for SDDS (IMF, EDS Guide < SNA 93 & BPM 5) The Undersecretariat Of Treasury Slide 12

Central Government Total Debt for PSDS Responsible Institution : Turkish Treasury Reported to: OECD and Worldbank, member of database since Dec. 2010 Institutional Coverage : Central Government Data : Debt Stock Frequency : Quarterly Period : 2005 Q 4 - 2013 Q 1 Classifications: by original maturity, by day to maturity, by instrument type, by currency of denomination, by residence of creditor Data Source: Administrative Register, Treasury Domestic Debt and External Debt Information Systems Manual : Public Sector Debt Statistics Guide, 2011 < SNA 2008 The Undersecretariat Of Treasury Slide 13

Central Government Total Debt for SDDS Responsible Institution : TURKSTAT Reported to : IMF, member of database since Aug. 1996 Institutional Coverage : Central Government Data : Debt Stock Frequency : Monthly Period : 2013 M 6 – 2013 M 7 Classifications: by original maturity, by day to maturity, by instrument type, by currency of denomination, by residence of creditor Data Source: Administrative Register, Treasury Domestic Debt and External Debt Information Systems Manual : The Special Data Dissemination Standard, Guide for Compilers and Users < GFSM 2001 < SNA 93 The Undersecretariat Of Treasury Slide 14

Central Government Stock of Debt Securities Responsible Institution : Central Bank Reported to: Bank for International Settlements, member of database since Apr. 2010 Institutional Coverage : Central Government Data : Stock of Debt Securities Frequency : Quarterly Period : 2005 Q 1 -2013 Q 1 Classifications: by original maturity, by day to maturity, by instrument type, by currency of denomination, by residence of creditor Data Source : Administrative Register, Treasury Domestic and External Debt Information Systems Manual : HSS < SNA 2008 & BPM 6 The Undersecretariat Of Treasury Slide 15

Maastricht Debt for EDP Tables Responsible Institution : TURKSTAT Reported to: Eurostat, member of database since 2001 Institutional Coverage : General Government Data : Outstanding Debt Frequency : Yearly Period : 2000 - 2012 Valuation : Face value (as defined in CR 479/2009 ) Classifications: by institutional sector, by instrument type Data Source: Administrative Register, Treasury Domestic Debt and External Debt Information Systems (for debt of central government), CBRT Electronic Data Delivery System and Treasury External Debt Information System (for debt of local governments), Turkish State Mint (for Currency and Deposits), Information System of Public Sector Treasurership (for holders of debt securities, for consolidation purpose), Turkish Employment Agency (as holder of debt securities, for consolidation purpose) Manual : Manual on Government Deficit and Debt <ESA 95 & CR 479/2009 The Undersecretariat Of Treasury Slide 16

Government Guaranteed Debt for EDP Questionnaire Responsible Institution : TURKSTAT Reported to : Eurostat, member of database since 2001 Institutional Coverage : General Government Data : Stock of Treasury Guaranteed Debt, amounts of new guarantees provided, guarantees called (undertaken), repayments relating to guarantees called, write-offs by Government, fees collected for providing Guarantees, Amounts included in the starting line of EDP 2 A via Risk Account Frequency : Yearly Period : 2009 - 2011 Classifications: By institutional sector Data Source: Administrative Register, Treasury External Debt Information Systems Manual : Manual on Government Deficit and Debt <ESA 95 & CR 479/2009 The Undersecretariat Of Treasury Slide 17

Central Government Debt for GFS Tables Responsible Institution : Ministry of Finance Reported to: IMF, member of database since Sep. 2011 Institutional Coverage : Central Government Data : Outstanding Debt and Receivables Frequency : Yearly Period : 2008 - 2011 Classifications: By instrument Data Source: Administrative Register, Treasury Domestic Debt and External Debt Information Systems, CBRT for market price of Domestic Debt Securities, Reuters for market price of Eurobonds, Receivables Management and Information System. Manual: Government Finance Statistics Manual, 2001 < SNA 93 The Undersecretariat Of Treasury Slide 18

Gross external debt of Turkey for SDDS Responsible Institution : Turkish Treasury Reported to : WB, member of database since Aug. 1996 Institutional Coverage : All sectors of economy Data : Outstanding Debt Frequency : Quarterly Period : 2012 Q 4 – 2013 Q 1 Classifications: By sectors (general government, central bank, banking sector, other sectors, direct investment) by original maturity, by instruments. Data Source: Administrative Register, Treasury External Debt Information Systems, CBRT for private sector external debt. Manual: External Debt Statistics Guide for Compilers and Users, 2003 < SNA 93 & BPM 5 The Undersecretariat Of Treasury Slide 19

New Adjustments Required to Implement SNA 2008 for Current Debt Statistics Change in Sector Classification Change in Coverage of Debt Instruments Change in Valuation Other Changes The Undersecretariat Of Treasury Slide 20

Change in Sector Classification The quantitative criterion is applied to check if a publicly controlled non-financial unit is able to undertake a market activity. A market producer must cover through sales more than %50 of its production costs. If a unit is not a market producer, it must be classified within general government sector Current System v The «Financial Accounts Working Group» , a group of co-worker agency, Treasury, CBRT, Mo. F and TURKSTAT was established and has been working cooperatively since 2008 v The principles and procedures of the compilation and dissemination of general government financial statistics is determined with a regulation jointly prepared by this working group and revised every three years period. The Undersecretariat Of Treasury Slide 21

Change in Scope of Debt Instruments Stock of Debt Under ESA 95 = AF 2 (Currency and Deposits) + AF 3 (Securities other than shares) + AF 4 (Loans) + AF 5 (Shares and other equity, if any) + AF 6 (Insurance technical reserves, if any) + AF 7 (Other accounts payable) Stock of Debt Under ESA 2010 = AF 2 (Currency and Deposits) + AF 3 (Debt Securities) + AF 4 (Loans) + AF 5 (Equity, if any) + AF 6 (insurance, pensions and standardized guarantee schemes, if any) + AF 7 (Financial Derivatives) + AF 8 (Other accounts payable) The Undersecretariat Of Treasury Slide 22

Change in Scope of Debt Instruments Maastricht Debt under CR 479/2009 < ESA 95 = AF 2 (Currency and Deposits) + AF 3 (Debt Securities / excluding AF 34; Financial Derivatives) + AF 4 (Loans) Maastricht Debt under proposed changes in CR 479/2009 = AF 2 Currency and Deposits + AF 3 Debt Securities + AF 4 Loans + AF 71 Financial Derivatives other than employee stock options (AF 34 in ESA 95) (? ) + AF 81 Trade Credits and Advances (AF 71 in ESA 95) (? ) + AF 6 Insurance, pension and standardised guarantee schemes (-) The Undersecretariat Of Treasury Slide 23

Change in Valuation There is no change in valuation of debt instruments in SNA 2008 (ESA 2010). The stock of government liabilities should be recorded in national accounts at their market value at the end of the accounting period, in the closing balance sheet. So, the valuation technique for central government debt (for PSD), stock of debt securities (for BIS), Central Government Debt for GFS Tables, Central Government Debt for SDDS, Gross External Debt for SDDS will NOT change. But, valuation for Maastricht Debt may change within the proposed changes in CR 479/2009 from “face value” to “market value” (or nominal value). The Undersecretariat Of Treasury Slide 24

Things to do for SNA 2008 Transformation in Debt Statistics Review non-financial public institutions in accordance with quantitative criteria v Revision of the «Regulation on General Government Financial Statistics» in coordination with Financial Accounts Working Group Review of debt instruments; especially AF 8 other accounts payable and decide its data source Revise the measurement of debt reported to international institutions, except government debt for GFS, v Establishing the necessary infrastructure to provide debt at market value, through existing Treasury information systems. v Continue close inter-agency coordination v Ensure the sufficient and sustainable IT and human resources The Undersecretariat Of Treasury Slide 25

Thank you very much for your attention. . The Undersecretariat Of Treasury Slide 26