Turkey’s Debt Spiral Deepens: Citizens, SMEs, and Farmers Drowning in Borrowing Costs

The latest weekly economic report by the CHP Parliamentary Group paints a troubling picture of Türkiye’s growing debt burden. The analysis highlights how small and medium-sized enterprises (SMEs), the agricultural sector, and individual citizens are all facing escalating credit obligations — a reflection of persistent inflation, high interest rates, and a tightening financial environment.

SMEs Struggling Under Mounting Debt

According to the report, SMEs’ credit debts surged by ₺450.8 billion in August compared to the previous month, reaching ₺5.56 trillion. Meanwhile, non-performing (bad) loans among SMEs grew by ₺21.1 billion, climbing to ₺158.5 billion.
These figures indicate that while credit volume is expanding, a growing portion of businesses are unable to service their debts on time, signaling deeper liquidity challenges in Türkiye’s production backbone.

Agriculture Sector Facing a Debt Deadlock

The agricultural sector’s total bank debt rose by ₺13.2 billion in August, bringing the total to ₺1.1 trillion. Of this, ₺859.7 billion is owed to state banks, and ₺234.5 billion to private and other financial institutions.
Although the share of bad loans remains smaller compared to total credit, the trend is alarming. In August alone, the amount of overdue agricultural loans under legal enforcement rose by ₺811 million, pushing total non-performing agricultural debt to ₺9.4 billion.
Analysts warn that rising costs of production, climate pressures, and loan dependency are creating a structural debt trap in Turkish agriculture — one that could undermine food security if left unchecked.

Household Debt Hits Record Levels

The report underscores the severity of Türkiye’s household debt crisis, with citizens setting new records in both credit and card borrowing. Between September 19–26, individual loans and credit card debts jumped by ₺85.8 billion, reaching an unprecedented ₺5.304 trillion.
Of that increase, ₺51.2 billion came from personal loans, now totaling ₺2.702 trillion, while credit card balances rose by ₺34.6 billion to ₺2.601 trillion.
Including debts owed to asset management companies and TOKİ, citizens’ total financial liabilities reached ₺5.462 trillion.

A 35% Surge Since Year-End 2024

Compared to the end of 2024, household debt to banks via credit cards and personal loans has risen by 34.7%, an increase of ₺1.366 trillion. When combined with other obligations, the total financial debt of citizens has expanded by ₺1.393 trillion since the beginning of 2025.
Such rapid growth in personal debt, fueled by inflationary pressures and stagnating incomes, highlights the erosion of household purchasing power and growing reliance on credit for basic needs.

Non-Performing Consumer Loans Skyrocket

The total value of consumer loans and credit card debts under legal enforcement reached ₺206.3 billion as of September 19, marking an 84.7% increase since January 2025. This means ₺95 billion of new debt has entered legal proceedings in less than nine months — a clear sign that more households are defaulting.
Experts note that this surge in delinquency could soon ripple across the financial system, increasing banks’ provisioning costs and straining consumer credit markets.

Interest Payments Crushing Households

The report also warns of a heavy interest burden on Turkish citizens. With record-high lending rates, households are paying billions just to service their debts. In the first eight months of 2025, citizens paid ₺454.5 billion in interest on personal loans and ₺318.8 billion on credit cards — a combined total of ₺773.3 billion, up 46% from the same period last year.
The report projects that total interest payments by citizens will exceed ₺1.2 trillion by year’s end, underscoring how the monetary tightening cycle has shifted the cost of stabilization directly onto the public.

A Deepening Cycle of Debt and Inequality

As inflation persists and real incomes lag, Türkiye’s economy appears trapped in a vicious debt cycle. Citizens borrow to survive, businesses borrow to stay open, and farmers borrow to plant. Yet the rising cost of credit ensures that debt itself becomes the greatest burden.
The CHP’s findings serve as both a diagnosis and a warning: without structural reform, transparent pricing, and equitable access to affordable credit, Türkiye risks seeing its most vital economic actors — citizens, farmers, and SMEs — consumed by their own obligations.