In this paper, we develop a comprehensive framework to obtain a ‘broad definition’ of overall public debt stock accumulation in Turkey. To do this first, we identify ‘invisible balance’ of public sector incurred from politically backed (informal) off-budget debt-creating transactions among public entities. Then, we compute the stock of hidden liabilities accumulated in the form of persistent deficits of invisible balance from 1989 to 2010. We showed that the overhang of public debt was in play in 2000–2001 crisis episodes. Finally, we analyse both hidden debts and overall debt stock on phase-space and show that debt dynamics follow a chaotic path, generating instability on fiscal structure and increasing vulnerability of the economy to the financial crisis through liquidity squeeze arose in state financial enterprises.
Keywords: fiscal transparency, informal transactions, off-budget public debt, financial crisis, phase-space, chaos, sustainability, Turkey