Turkey to extend new $4.3 billion loan package to companies

The package is intended to encourage lending after a currency crisis saw the lira lose nearly 30% of its value last year and drove the economy into recession.

Companies would be able to […] The lira crisis raised the cost of servicing foreign debt for companies who had for years been flourishing on cheap credit, leading to a build up of bad loans in banks.

Finance Minister Berat Albayrak announced two $4.9 billion packages in the last two months, one supporting state banks and the other aimed at helping bail out some exporting sectors.

He also announced two other packages aimed at boosting small and medium-sized businesses earlier this year.

It is not surprising that the package comes ahead of the re-run of Istanbul mayoral elections on June 23, said Piotr Matys, emerging markets forex strategist at Rabobank.

“Such policies might work only over the short-term and will not provide sustainable growth unless fundamental reforms are announced… to rebalance the economy in a sustainable way,” he said.

State banks’ loans grew more than 11% in the first four months of 2019, while those of the whole sector grew 7%, data the BDDK banking watchdog showed. Investors have voiced concern about the government’s encouragement of state banks to increase lending to support growth.

Ziraat Bank, Is Bank, Halkbank, Garanti Bank, Yapi Kredi Bank, Vakifbank, Akbank, QNB Finansbank, Denizbank, TEB, Sekerbank and Eximbank will participate in the new loan package, the TBB said.

Reporting by Ali Kucukgocmen and Ezgi Erkoyun; additional reporting by Tom Arnold in London; Editing by Jonathan Spicer […]