Turkey will free up lending, boosting growth: Erdoğan adviser
Turkey will free up lending for the nation’s banks by implementing new regulations that will allow firms to set aside fewer provisions for bad debt, wrote Cemil Ertem, senior economic adviser to President Recep Tayyip Erdoğan.
Banks are currently making “unnecessarily high provisions” when they issue loans, particularly the larger lenders, Ertem said in a column for the Daily Sabah newspaper.
“With this new system, unnecessarily cautious banks will not need this cautious attitude and the system will be more relaxed” he said.
Banks will be able to use cash repaid by borrowers under the government’s 250-billion lira ($65 billion) credit guarantee scheme, implemented this year, for further lending or to support Turkey’s capital markets, boosting economic growth, Ertem argued.
Repayments being made under the government scheme show that hardly any of the loans were non-performing, Ertem said. Bad debt constitutes just 0.7 percent of the total money lent, he said.
The Treasury is also expected to support economic growth next year through borrowing, which will have a marginal impact on interest rates, he said.