Turkey eases credit card rules in latest economic stimulus
Turkey eased repayment rules on credit card debt and made it easier to purchase furniture and holidays in an attempt to stimulate economic growth.
Turks will be required to repay a minimum of 30 percent of their credit card debt on a monthly basis, down from rates as high as 40 percent, according to a decision published in the Official Gazette on Thursday.
The measure comes the day after the government announced 25 billion liras ($4.3 billion) of new loans for industry. The lending will be provided by the country’s biggest banks at below market rates and will be guaranteed by the Treasury.
President Recep Tayyip Erdoğan’s government is seeking to bring the economy out of a downturn sparked by a currency crisis last year. But some of the unorthodox measures have been met with scepticism form economists and ratings agencies, who say Ankara needs to take long-term measures to right imbalances in the economy and alleviate the banking industry of a mounting pile of bad debt.
Turks can now purchase furniture via instalment payments on credit cards over 18 months, up from a previous 12 months, according to Thursday’s decision by the banking regulator. They can buy holidays over 12 months compared with a maximum period of nine months previously.
Turkish credit card transactions have risen about 18 percent in lira terms this year, roughly equivalent to the consumer price inflation rate of 18.7 percent.
Measures the government is taking threaten to undercut monetary policy. The central bank has kept its benchmark interest rate unchanged at 24 percent since October, when it raised it 625 basis points to defend the lira and slow inflation.