Turkey’s Ministry of Treasury and Finance announced a set of new precautions regarding the bank loans of the real sector within the scope of the “action plan” in practice, which projects that companies will not be required to provide collateral guarantee for the loans that can’t meet the risk exposure due to the exchange rate impact.
Stating that this austerity package would be “relieving” for the real sector, the ministry also noted that the conditions of each company would be reviewed individually. According to the announcement, the package foresees that:
- Credit channels will be kept open,
- Provided that the cash flow is sustained, loan terms and pricing will continue to be flexible,
- For loans that have excessed the limit due to exchange rate impact, the excess will be disregarded, and there will not be any loan closing requests,
- Companies will not be required to provide the collateral guarantee for the loans that can’t meet the risk exposure due to the exchange rate impact,
- Loan delays, dud cheques, and protested bills due to the economic environment since August 8 will be able to be reported to the Risk Centre with the code of “compelling reason”.
Such an act from the government to come to the companies’ rescue was expected since the issuing of the “Regulation Regarding the Reconstruction of the Debts to the Financial Sector” in the Official Gazette on August 15. A similar course (also known as “the İstanbul Approach”) was taken after the economic crisis in 2001, the total amount to reconstruct in which was around $6 billion, while this time (which is now called “the Ankara Approach”) the sum is expected to reach $100 billion.