Albayrak says Turkey’s special loans to industry surge

Turkish Treasury and Finance Minister Berat Albayrak said cheap loans allocated by banks to industry under a special government plan surged by 106 percent in October.

The amount of loans allocated under the scheme climbed to 24.5 billion liras ($4.3 billion), Albayrak said on Friday, according to Dünya newspaper.

The lending, provided under the so-called IVME Financing Package, will help Turkey achieve an economic growth target for next year of 5 percent, Albayrak said. Banks are providing the loans to companies who produce value-added goods and purchase locally made machinery, he said.

Turkey’s government has introduced a range of financial incentives for companies and consumers to borrow in order to lift the economy out of a painful economic downturn. The unorthodox measures have created concern among some economists, who are urging the government to pursue prudent economic policies and a possible loan accord with the International Monetary Fund.

Albayrak announced in early October that Turkey had increased the allocation of loans under IVME to 9.5 billion liras by the end of September from 5.2 billion liras on Aug. 5. Companies had borrowed 3.3 billion liras under the plan, he said. The government announced the scheme in May.

Albayrak said earlier this week that the government was introducing a new funding package for smaller firms in industries such as textiles and confectionary that will provide them with loans of up to five years in duration with a grace period on payment of capital of as long as two years.