Turkey to limit foreign borrowing by small firms

Turkey’s government will place limits on some 23,000 small and medium-sized companies borrowing in foreign currency, Deputy Prime Minister Mehmet Şimşek said.

The borrowing constitutes about 16 percent of total borrowing by Turkish companies in currencies other than lira, Şimşek said in a speech in Istanbul on Wednesday, according to Dünya newspaper. Exceptions will be made for some smaller firms, such as those who import machinery, he said.

The need for companies to repay their foreign debt obligations means there is sometimes “exaggerated demand for dollars” that creates volatility in currency markets, Şimşek said.

Some 2,000 larger Turkish firms hold about 84 percent of the foreign debt owed by corporates. The government has taken legal measures this week to collect data on such borrowing, he said.