Turkey may see serial bankruptcies - ratings chief
Troubles in Turkish industry, particularly the construction sector, could lead to serial bankruptcies unless the government restores confidence and companies gain better access to loans.
Stress on the economy and in politics is increasing, leading firms to hold cash and to be less inclined to repay debt, said Orhan Ökmen, head of the Japan Credit Ratings Agency for Eurasia. Banks, in turn, are less willing to extend loans to troubled sectors of the economy, he said.
The government’s credit guarantee scheme, which extended more cash to firms this year, only had a limited effect in easing firms’ cash-flow problems. Turkey is now too reliant on the construction industry, increasing imbalances in the economy, Ökmen told Cumhüriyet newspaper in an interview.
Turkish builders are also having a more difficult time funding large-scale projects, as losses in the lira’s value against foreign currencies increase funding costs and higher energy prices weigh on costs, he said.
Developments in politics and the government’s focus on pushing up economic growth with consumption and construction spending mean the time for structural reform has been lost, Ökmen said. Furthermore, Turkish monetary policy laid down by the central bank, which includes keeping a rein on inflation with interest rates, is not successful, exacerbating problems for the wider economy, he said.