Turkey cuts interest rates on loans for exporters

Turkey’s government reduced interest rates on loans paid to exporters to help drive sales abroad and meet economic growth targets.

The government reduced the cost of the loans by between 60 and 140 basis points, or 0.6 and 1.4 percentage points, Trade Minister Ruhsar Pekcan said, according to Dünya newspaper. The decision followed moves by state-run banks to cut interest rates on loans to businesses and consumers.

Turkey aims to fund $50 billion of exports this year in loans and guarantees compared with $44.1 billion in 2019, Pekcan said. That was equivalent to 26 percent of projected exports in 2020, she said.

The government is using cheap loans to help meet an economic growth goal of 5 percent this year. Economic activity slowed sharply last year following a currency crisis in 2018, putting domestic political pressure on the government of President Recep Tayyip Erdoğan. Higher exports also help to curb a trade deficit that has widened in recent months after imports recovered from a slump.

The reduction in loans costs means short-term borrowing for exporters fell to between 1.8 percentage points and 2 percentage points above international benchmark rates, Dünya said. Medium and long-term borrowing costs were set at between 1 percentage point and 3.75 percentage points over the benchmarks, it said.