Page 64 - TURKRptJun19

Turkey announces TRY30bn financing package to help bail out importing sectors. Turkey’s public lenders are to provide a Turkish lira (TRY) 30bn ($4.9bn) financing package to help bail out importing sectors including manufacturing that were impacted by last summer’s lira crisis, Turkish Finance Minister Berat Albayrak said on May 23. Three big state banks have been tapped to provide the funding by the end of this year, Albayrak said. The funding is the second state-backed package announced by his ministry in less than two months. Turkey’s recession-hit economy is paling under the weight of huge FX-denominated lending that has become more expensive with the collapse in value of the TRY, which has lost around 40% of its value agains the USD since the start of last year. The financing will come from Ziraat Bank, Halk Bank and Vakif Bank. Loans be awarded for up to two years without principal repayment, and will have a maturity of up to 10 years. The first package, unveiled on April 10, is also worth around $4.9bn, but it is targeted at energy companies. The second package, said finance officials, would be concentrated on Turkey’s automotive and chemical sectors, among others. The idea is to assist sectors highly dependent on raw material imports for production, much of which is then exported as processed goods. Albayrak said in his presentation in Istanbul: “Import-dependent sectors, along with sectors contributing to employment, showing a high trade deficit will be supported by the financing package.” Raw material, intermediate goods, agriculture and machinery-manufacturing sectors, would be given a lift by the package, he added. Turkey’s years of booming growth were fuelled by heavy borrowing in foreign currencies. Now Turkish companies and banks are struggling under the burden of bad debt. Only around $16bn of the $400bn of loans in Turkey’s banking sector had been restructured as of March, and some analysts expect its non-performing loan (NPL) ratio to double by year-end to 8%, Reuters reported. Turkey’s current account deficit soared above $27bn last year. But the huge hit taken by the lira in the currency crisis has sharply raised import prices and domestic demand has sagged amid the recession. The deficit has consequently been substantially squeezed. It stood at $589mn in March. Albayrak said he anticipated that the current account would register a surplus from June onwards. He added that he hoped the economy had already come out of recession.
64 TURKEY Country Report June 2019 www.intellinews.com