Turkish central bank, companies clash again over loan rules
Turkey’s central bank and a major business group clashed over the imposition of loan rules that limit borrowing by firms unless they are overall net exporters of goods and services.
Central bank governor Şahap Kavcıoğlu faced criticism from the Union of Chambers and Commodity Exchanges of Turkey (TOBB), the country’s largest business group, at a meeting on Tuesday. He also faced complaints from the Istanbul Chamber of Industry (ISO) on Friday.
Turkey has introduced the rules to help boost exports, engineer a current account surplus and reduce companies’ reliance on imported goods. It took the steps after interest rate cuts, demand for imports and soaring inflation contributed to a slump in the value of the lira. The currency has lost more than a quarter of its value against the dollar this year and fell 44 percent in 2021.
TOBB chief Rifat Hisarcıklıoğlu said the authorities should be wary of the side effects of the measures. Firms were facing rising capital needs because of soaring inflation and the rising cost of inputs, he said.
"Commercial loans at some banks have an interest rate of 30-50 percent, while the policy rate is at 14 percent and deposit rates are 20 percent. Some don't issue loans at all," Hisarcıklıoğlu said.
Kavcıoğlu dismissed criticism of the measures saying the government was ensuring that rediscounted loans reached the correct and healthiest firms. “We have partially succeeded in this,” he said.
The central bank governor denied that he had criticised companies for hoarding goods at Friday’s meeting with the ISO. He said his comments were misunderstood and that he was warning companies against borrowing and then using the cash to buy foreign currency.
The remainder of the meeting was closed to members of the press, but two participants told Reuters that a Q&A session with Kavcıoğlu was tense. They also said that figures for the use of loans shared by Kavcıoğlu were from the first half of the year, but the problems began in the second half.
"They should not overlook our concerns regarding access to financing," one participant said.