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Southeast Europe
December 21, 2018 www.intellinews.com I Page 16
Turkish government ‘pressing banks
to transfer large companies’ debt difficulties to their balance sheets’
bne IntelliNews
Anxiety is mounting in Turkey that the debt difficulties of large companies amid the country’s economic turmoil are being transferred to the balance sheets of banks under government pressure.
Such a line was taken by Atilla Yesilada of Global Source Partners, who on December 17 told VOA: “I understand through my conversations with bankers, AKP [Turkey’s ruling party] or govern- ment officials are intervening in favour of large companies, for the banks to restructure their loans. The problem is shifting from corporate balance sheets to bank balance sheets.”
As a result of the situation, banks cannot issue new loans, Yesilada, said, adding: “... so this is a vicious circle from which there is no way out. The solution is you have to inject fresh cash, fresh resources, fresh capital into the economy. We are talking $50- 60bn to fill the tank and get the car going. No one has that kind of money, except the IMF.”
Turkish President Recep Tayyip Erdogan has ruled out IMF assistance amid the difficulties sparked by the currency crisis that peaked in Turkey dur- ing the summer.
Analysts say that with crucial local elections for control of Turkey’s main cities and other munici- palities due on March 31 next year, Erdogan will be reluctant to look for international help, given
Turkey's third most populous city Izmir is an opposition stronghold. Amid the economic fallout, campaigning there and in Ankara and Istanbul, held by the ruling coalition, will be fierce.
that ending Turkey’s dependence on IMF support is one of his most significant achievements.
“All the [opinion] polls show me, the main concern for the voters is the economy, and they are going to register their protest in local elections,” Yesi- lada was also reported as saying. “My estimate, AKP will lose five percentage points; I expect AKP to suffer great losses, I would not be too surprised if they lose Istanbul or Ankara.”
The Turkish private sector had obligations to repay $64.75bn in foreign-loan principal payments within one-year as of end-October, down from $66.3bn at end-September, the central bank said on December 14.
Turkey was obliged to repay a total of $173.8bn in foreign debt within one-year as of end-October, down from $176bn at end-September, the central bank added on December 17.
Yesilada was also cited as saying that Turkey’s lat- est industrial production figures, which record a 5.7% y/y decline in October, were “horrendous”.
“Industrial production was the most disappointing visa vie the consensus,” he added. ”We’ve seen annual production contraction by more than five percent. It looks like despite success in exports, domestic demand is weak, or producers are very hesitant to start domestic production.”