Domestic Original Sin of Sovereign Debt in Türki̇ye

Abstract

The study analyzes the original sin of sovereign debt in Türkiye with a focus on domestic original sin. Eichengreen and Hausmann (1999) define original sin as the inability of a country to borrow in its own currency in the international market, while the issuance of foreign currency debt in the domestic market is defined as domestic original sin (Eichengreen, Hausmann, and Panizza, 2003). In this context, the structure of the debt portfolio was evaluated based on the indicators developed by Eichengreen, et al. (2003) and its simplified version widely used in the literature. Based on the analysis of the sovereign debt portfolio, it has been concluded that although the debt stock to GDP ratio is relatively low in Türkiye, the domestic original sin has reached historically high levels and currency mismatch is significant.