Big Turkish conglomerate Dogus Holding could reportedly turn out to be a “canary in the coal mine” for Turkey’s corporate debt problems, the Financial Times wrote on April 24.

Worries over such debt difficulties against a backdrop of an overheating Turkish economy and sliding Turkish lira (TRY) have been on the rise lately, with a London-based fund manager saying last week that Turkey’s economic predicament is starting to ring alarm bells akin to those seen in the Asian debt crisis of 1997. Another big Turkish conglomerate, Yildiz Holding—owner of the brands Godiva chocolate and McVitie’s biscuits—was on April 19 reported to be likely to complete the restructuring of $6.5bn of its total $8.5bn of debt by the end of this week.

Dogus has neither confirmed nor denied several reports that it is restructuring its own debt, but it has been selling down stakes in some of its top assets, including shrinking its holding in Dogus Restaurant Entertainment and Management (d.ream, the entertainment arm that owns Nusr-et), known for flambuoyant international star chef Salt Bae, and other restaurant chains.

Under Recep Tayyip Erdogan, first as prime minister, now as president, Turkish economic growth has been fuelled by cheap international credit. Corporates took out large loans in dollars or euros, but as Moody’s Investors Service warned on April 16, the prolonged weakness of the TRY combined with double-digit inflation means the cost of servicing these debts is rocketing, something that will likely increase problem loans for Turkey’s banks.

So dire is the scenario, according to some observers, Erdogan has been driven to bringing forward the scheduled November 2019 parliamentary and presidential elections to just two months from now on June 24.

“Corporate debt is now roughly 70 per cent of gross domestic product [in Turkey] according to our estimate,” Ugras Ulku of the Washington-based Institute of International Finance told the FT. “More than half of that is in foreign currency. So whenever the lira gets weaker, even though we haven’t so far seen widespread defaults, the depreciation eats up profits or distorts balance sheets.”

The markets are thus waiting with bated breath on today’s (April 25’s) central bank monetary policy meeting to see whether interest rate hikes are introduced to address the plight of the lira (despite Erdogan’s regular calls for cheaper money), which has lost around 7% cent of its value against the dollar this year.

Boasting a 7.4% gain in GDP, Turkey was the fastest growing economy in the G20 last year. Government stimuli were used to drive it out of a slump that followed the July 2016 attempted coup. Investors, however, have warned that the growth is unbalanced, with the country’s current account deficit now one of the worst in the world. Strong domestic demand has sucked in imports and export growth has not expanded at a fast enough rate, thus leaving Turkey with wide current account gap that stood at 5.6% of GDP at the end of 2017 against the end-2016 ratio of 3.8%.

That deficit can only be funded with foreign financing, causing Turkey to rely on hot inflows of money from abroad that can easily dry up if sentiment in global financial markets shifts.

There are analysts who contend that most of the corporates reported to be under serious pressure with their debts have solid assets and active operations meaning that, while they are experiencing some balance sheet difficulties, their overall asset quality will be sustained by satisfactory real GDP growth.

But the central bank’s foreign currency reserves stand at below $90bn. That covers only half the debt that is maturing or needs to be rolled over. And that is weighing heavily on the lira, down by half against the dollar in the past five years.