The Turkish treasury will make a payment of $422.1 million (€525.6 million) to the International Monetary Fund today, deputy prime minister Ali Babacan said in televised remarks yesterday.

A decrease in government debt to about 40 per cent of gross domestic product from 78 per cent when prime minister Erdogan came to power a decade ago has helped drive lira borrowing costs below higher-rated countries including India, Russia, Brazil and Chile.

The decrease was countered by a surge in corporate borrowing over the period, leaving Turkey “one of the most leveraged economies in the emerging-market universe,” Goldman Sachs said in a report yesterday.

Net external debt of $413 billion, about 51 per cent of gross domestic product, puts Turkey in a league with other countries including the Czech Republic and Poland, and the private sector’s pace of credit accumulation is accelerating, Goldman said in a report from London by economists Ahmet Akarli and Michael Hinds.

While the Turkish government “deserves praise” for fiscal discipline and working its way out of IMF debt, “the private sector has taken its place,” it said.

Turkey took its first loan from the IMF in 1961, according to Mr Babacan. It last borrowed in 2008, and today’s payment will mark the first time Turkey has no outstanding debt to the fund since 1994, he added.

When Erdogan’s government came to power in 2002, it owed the IMF $23.5 billion, according to the state-run Anatolia news agency.

Turkey’s two-year lira debt yields were more than 23 per cent as recently as 2008. They fell four basis points to 4.97 per cent in Istanbul this morning.

Last June, Turkey pledged $5 billion to the IMF to help with the European debt crisis, which will make the country a net lender rather than borrower to the fund. The money will be given on condition that Turkey could call it back immediately, a clause Turkey is demanding because of its high current-account deficit, Mr Babacan said.

Turkey’s private-sector debt contributed to giving it the world’s biggest current-account deficit after the US in 2011. At $77 billion, it was about 10 per cent of GDP. The gap was the third-largest last year. The deficit will probably be about 6.8 per cent of GDP this year, according to the average estimate of 21 economists surveyed by Bloomberg.