IV Macro Policy & Sovereign Debt·Analysis·Türkiye and Its Neighbourhood

A balance sheet tied to the dollar system complies with sanctions: 51% FX public debt, a 210.8 billion dollar corporate gap and closed Iran routes

In Türkiye, 51% of central government debt and the 210.8 billion dollar net short position of non-financial companies are tied to the dollar. When US secondary sanctions on Iranian aviation touch this balance sheet, Ankara's compliance should be read less as a choice than as a necessity.

Türkiye & Neighbourhood Desk · 23 September 2026 · 9 min read · 15 sources

Front facade of the Central Bank of the Republic of Türkiye headquarters in Ankara — Central Bank of the Republic of Türkiye headquarters, Ankara, 5 March 2014 (archive photo)Photo: Vikiçizer / Wikimedia Commons · CC BY-SA 3.0 · resized · Source

Why it matters

Three data points landed side by side in the same week: 8,145.8 billion lira of the central government debt stock is foreign-currency denominated, the net FX short position of non-financial companies rose by 5.03 billion dollars in a month to 210.8 billion dollars, and the US Treasury threatened to cut anyone servicing Iranian aircraft off from the dollar system. Turkish airlines closing their Iran routes until March 2027 is the natural consequence of this picture; the cost lies in tourism and transfer revenue, the gain in protecting the risk premium.

Implications

The central government debt stock rose by 422.5 billion lira in August to 15,893.8 billion lira; 8,145.8 billion lira (51%) is foreign-currency denominated and 5,010.5 billion lira floating-rate.
The net FX short position of non-financial companies rose by 5,027 million dollars in July to 210,802 million dollars; liabilities rose by 7,306 million dollars and assets by 2,279 million dollars.
Türkiye's 5-year risk premium rose 4.14% to 242.43 basis points on 21 September; the 10-year yield was 32.52% on 22 September, and the BIST 100 fell 1.04% to 13,198.84 points.

Half the balance sheet is tied to the dollar

According to data released by the Ministry of Treasury and Finance on 21 September, the central government's gross debt stock stood at 15,893.8 billion lira at the end of August, up 422.5 billion lira from 15,471.3 billion lira at the end of July. 7,748 billion lira (49%) of the stock is in Turkish lira and 8,145.8 billion lira (51%) in foreign currency. By interest structure, there is 10,144 billion lira of fixed-rate, 5,010.5 billion lira of floating-rate and 739.3 billion lira of CPI-indexed debt. This means that the lira value of more than half of the public balance sheet is recalculated according to the dollar/lira rate.

The private sector side is even more pronounced. According to data published by the Central Bank on 22 September, the net FX short position of non-financial companies rose by 5,027 million dollars from the previous month to 210,802 million dollars in July. While FX assets rose by 2,279 million dollars, liabilities rose by 7,306 million dollars; of the rise in liabilities, 3,472 million dollars came from derivative liabilities, 2,080 million dollars from cash loans obtained domestically and 1,147 million dollars from import debts. The short-term net FX position, meanwhile, fell by 2,168 million dollars to a surplus of 4,374 million dollars. The near-term buffer is thinning while the longer-term gap is growing.

Why the sanctions touch this balance sheet

On 21 September US Treasury Secretary Scott Bessent said Iranian airlines would be shut down worldwide from 23 September, stating that airports and companies providing fuel, landing services or tickets to Iranian aircraft would be cut off from the dollar system. The US Treasury had listed 27 Iranian airlines on 8 September, and a Türkiye-based investment bank had also been sanctioned as part of the campaign. The mechanism is therefore directly financial: what is threatened is not a single airline but the correspondent banking access of the airport operator, the fuel supplier and the ticket-selling company.

For a public sector with half its debt in foreign currency and a private sector carrying a 210.8 billion dollar net short position, the cost of risking access to dollar clearing is not comparable with the revenue from the Iran routes. The result was visible on the ground: Mahan Air's Tehran–Istanbul and Tehran–Ankara services stopped on 21 September following a notice from the Directorate General of Civil Aviation; Iran flights by Turkish Airlines, Pegasus and AJet do not appear in their booking systems until March 2027. In 2024 more than 50 flights a day operated on Iran routes. Compliance is partial: Iranian state media outlet Tasnim reported that as of 23 September Baghdad and Muscat flights had been cancelled but Istanbul flights were continuing.

The same test for the neighbours

Iraq faced the same test on the same day, and the picture turned out more mixed. According to Reuters, government sources were discussing suspending Iranian flights at Baghdad from midnight on 23 September and shifting services to Najaf, while a Transport Ministry spokesman said flights were continuing as planned. Iraq's economy is more dependent on Iran than Türkiye's; the denial and the compliance signal coming together can therefore be read as an effort to buy time.

Sanctions pressure is operating in the same hours as diplomacy. On 22 September, on the sidelines of the UN, Trump convened 12 regional countries including Türkiye, and US envoys talked with Iranian officials for about 3 hours. Foreign Minister Araghchi, for his part, listed the conditions for reopening Hormuz: lifting the blockade, releasing frozen assets and ending fighting on all fronts. In the same week Ankara stands both at the table and within sanctions compliance.

What the market is pricing

Türkiye's 5-year risk premium rose 4.14% from 232.80 basis points on 18 September to 242.43 basis points on 21 September. The 10-year bond yield was 32.52% on 22 September, below 32.83% on 16 September and above 32.07% on 14 September. The BIST 100 index closed down 1.04% at 13,198.84 points on 22 September, with turnover of 147.5 billion lira; the previous day it had risen 0.40% to 13,337.69 points. The dollar/lira was in a 48.82–48.83 range on 22 September. Brent fell to 98.55 dollars the same day.

The reading here is this: the rise in the risk premium comes more from global dollar rates and technical selling in the funds market than from the Iran sanctions, but sanctions compliance is the item preventing this premium from turning into a country-specific spike. In a scenario where Ankara refused to comply, given that a Turkish bank is already on the list, secondary sanctions risk would be added directly to the risk premium. The cost of compliance lies in visitor and transfer traffic from Iran; the size of this cost may be visible for the first time in the August visitor data due on 25 September.

Probabilities

Scenarios

Scenario	Probability	Trigger	Market impact
H1Quiet compliance, premium protected	55%	Türkiye maintains compliance on Iranian aviation, no new Turkish institution is added to the sanctions list and US–Iran contacts continue.	The risk premium stays limited to global rates and local technical pressure; the loss of Iran-related tourism and transfer revenue feeds into the balance sheet.
H2Sanctions extend to Turkish institutions	25%	The US Treasury lists additional Turkish companies or banks on grounds of Iran-linked payments, fuel or ground services.	Correspondent banking access comes into question; financing costs rise for a public and private sector with high foreign-currency debt.
H3Diplomacy produces a framework	20%	US–Iran talks reach a gradual framework on Hormuz, and an exemption or easing of aviation sanctions comes onto the agenda.	The energy bill and sanctions risk recede together; Türkiye's transfer and tourism role reopens.

Module A

Constraints Matrix

STRUCTURAL AVG 4.5 · TACTICAL AVG 2.3Structural constraints dominate: the outcome is set more by these limits than by the actors' preferences.

Hard structural constraintspersistent · beyond the actors' will

Foreign-currency public debt · Türkiye
5/5
8,145.8 billion lira (51%) of the central government debt stock is foreign-currency denominated; currency moves enlarge the stock without new borrowing.
Access to dollar clearing · United States
5/5
The US Treasury threatens to cut off from the dollar system anyone providing fuel, landing services or tickets to Iranian aircraft; a Turkish investment bank is already on the list.
Companies' net FX short position · Türkiye
4/5
Non-financial companies' net FX short position was 210,802 million dollars in July; it rose by 5,027 million dollars in a month.
Iran's Hormuz conditions · Iran
4/5
Tehran has tied reopening the strait to lifting the blockade, frozen assets and a ceasefire on all fronts.

Tactical frictiontemporary · eases over time

Scope of compliance unclear weeks
3/5
Mahan Air was stopped and Turkish carriers closed the route until March 2027; according to Tasnim, however, Istanbul flights were continuing on 23 September.
Near-term FX buffer thinning months
3/5
Companies' short-term net FX position fell by 2,168 million dollars in July to 4,374 million dollars.
Conflicting official stance in Iraq days
2/5
While government sources announced a suspension at Baghdad, a Transport Ministry spokesman said flights were continuing.
Conflicting sanctions date days
1/5
Most sources give the start of the aviation ban as 23 September, Fox News as 24 September; the two dates could not be reconciled.

Module B

Signal vs Noise

SIGNAL 60% · NOISE 40%

SIGNAL
The corporate gap is growing on the liability side
In July FX liabilities rose by 7,306 million dollars while assets rose by 2,279 million dollars; 3,472 million dollars of the increase came from derivative liabilities.
Apara — Companies' net FX short position rose by 5 billion dollars in a month
SIGNAL
Turkish carriers have closed the Iran route for an extended period
Iran flights by Turkish Airlines, Pegasus and AJet are absent from booking systems until March 2027; in 2024 more than 50 flights a day operated.
AirTurkHaber — Turkish Airlines, Pegasus and AJet suspend Iran flights
SIGNAL
The risk premium rose in sanctions week
Türkiye's 5-year CDS was 232.80 on 18 September and 242.43 basis points on 21 September, up 4.14%.
Data: Türkiye 5-year CDS ›Investing.com — Turkey CDS 5 Years USD Historical Data
NOISE
The 422.5 billion lira rise in the debt stock is a new borrowing boom
51% of the stock is in foreign currency; the sources do not separate the parts of August's increase due to currency revaluation and new issuance.
CNBC-e — Central government debt stock nears 15.9 trillion lira
NOISE
The US–Iran meeting shows Hormuz will reopen soon
Despite the 3-hour meeting, Araghchi set 3 preconditions: the blockade, frozen assets and a ceasefire on all fronts; aviation sanctions tightened the same week.
Data: Strait of Hormuz transits ›Fox News — Tehran sets conditions to reopen Strait of Hormuz

Module C

Asset-Class and Positioning Implications

Asset class	Exposure	Transmission channel	H1	H2	H3	Expected	Conviction	Horizon	What to watch
Credit	Türkiye external debt risk premium	Risk of secondary sanctions extending to Turkish financial institutions, and global dollar rates	0	−−	+	−0.30	●●●	0–3 months	Whether Türkiye's 5-year CDS closes above 250 basis points
FX	Real value of the Turkish lira	Sensitivity of foreign-currency public debt and the corporate gap to currency moves	−	−−	+	−0.85	●●●	0–3 months	The pace at which the dollar/lira approaches the 50 lira threshold
Sovereign debt	Extended-maturity lira government bonds	Transmission of the risk premium and inflation expectations to yields at extended maturities	0	−−	++	−0.10	●●●	3–12 months	Whether the 10-year yield settles above 33%
Equities	Aviation and tourism equities	Shrinking transfer and visitor revenue as Iran routes close	−	−	++	−0.40	●●●	3–12 months	The Iran line in the August visitor data due on 25 September

Triggers

Thresholds to watch

Indicator	Threshold	Today	What it means
Türkiye 5-year CDS	> 250	242	The zone where the risk premium prices a country-specific sanctions or financing risk on top of global dollar rates.
USD/TRY	> 50	48.81	The zone where the lira equivalent of foreign-currency public debt and the corporate gap grows rapidly.
Türkiye 10-year yield	> 33	32.52	The zone where the cost of longer-term lira borrowing settles above its 16 September peak.

Sources

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