Turkey will pare back economic stimulus – adviser
Turkey’s government will reduce the amount of loan guarantees it will award to industry as it seeks to intensify its battle with inflation, Bloomberg reported citing Cemil Ertem, senior economic adviser to President Recep Tayyip Erdoğan.
“We are going to act according to state of the economy and the central bank’s inflation targeting,” Ertem said by telephone, according to Bloomberg. “We’re going to look at banks’ risk sentiment and the non-financial sector’s appetite for credit.”
The government provided over 200 billion lira ($52 billion) in the guarantees, which act as security for larger amounts of lending by banks, during 2017. The stimulus helped boost annual economic growth to an estimated 7 percent.
Ertem said about 30 billion lira of the guarantees had been repaid and banks would be allowed to relend 5 billion lira. The disbursal of the remaining 25 billion lira will depend on economic developments, he said.
Prime Minister Binali Yıldırm had said in November that repaid loans would be redisbursed to companies in full.
Some economists have warned that Turkish growth rates are unsustainable and that the economy may face a hard landing should global sentiment toward emerging markets reverse.