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The Ottoman public debt was a term dated back to 1854, when the Ottoman Empire first entered into loan contracts with its European creditors shortly after the beginning with the Crimean War[1]. The Empire entered into subsequent loans, partly to finance railway construction and partly to finance deficits between revenues and the lavish expenditure of the Imperial court. Some financial commentators have noted that the terms of these loans were exceptionally favourable to the French and British banks which facilitated them, whereas others have noted that the terms reflected the imperial administrations willingness to constantly refinance its debts. [2]

The Empire defaulted on its loan repayments in 1875. In 1881 as part of the Decree of Muharrem which reduced the overall public debt, the Ottoman Public Debt Administration was established. This made the European creditors bondholders, and assigned rights to collect various tax and customs revenues of the Empire to the Administration.

Size

Ottoman Empire

  • In 1875 the nominal public debt was £200,000,000, with annual interest and amortization payments of £12,000,000, more than half the national revenue.
  • In December 1881, the debt was reduced from £191,000,000 to £106,000,000 with governments confession to PDA.

Republic of Turkey

  • In 1929 it was agreed that Republic of Turkey would only pay 67% of the debt, which amounted to 107.5 million gold lira.

Notes

  1. ^ Douglas Arthur Howard 'The History of Turkey' page 71
  2. ^ Gold for the Sultan: Western Bankers and Ottoman Finance, 1856–1881 Christopher Clay London 2001

References


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