The Ottoman public debt was a term which dated back to 4 August 1854, when the Ottoman Empire first entered into loan contracts with its European creditors shortly after the beginning of the Crimean War.
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 administration's willingness to constantly refinance its debts.
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.
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