By Nevzat Devranoglu
ANKARA (Reuters) – Targeted credit policies adopted by Turkey’s central bank have this year enabled small and medium-sized businesses (SMEs) to grab their highest ever share of banking sector loans, its deputy governor said.
The SMEs took 558 billion lira ($30 billion) of the 1.2 trillion lira in total corporate loans extended by commercial banks in the nine months to September, according to data compiled by the central bank.
“This is the highest share and amount of banking sector loans that SMEs received in history,” Taha Cakmak told Reuters in a written response to questions.
As part of an unorthodox economic programme introduced by President Tayyip Erdogan that prioritizes production, exports and low interest rates, the central bank has cut its policy rate twice in the last two months even as inflation topped 80%.
The central bank has also worked to reduce a widening gap between its policy rate and borrowing rates to enable cheaper access to financing.
It has set SMEs as a priority by excluding loans extended to them from collateral requirements imposed on creditor banks.
Cakmak said corporate loan interest rates had fallen to around 18% this year from an average of 23% in 2021, and that the share of borrowing in lira had increased in response to policies prioritising the currency.
“The current policy mix is not causing inflationary pressure and resources are being directed towards areas necessary for sustainable economic activity,” he also told Reuters
The lira has lost around 29% of its value against the dollar so far this year in response to low policy rates and on concerns over the direction of Turkey’s economic policy.
($1 = 18.5786 liras)
(Reporting by Nevzat Devranoglu; editing by John Stonestreet)
