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    Turkish gov’t focus on credits

    Hürriyet Daily News
    28.04.2009 - 00:00 | Son Güncelleme: 27.04.2009 - 19:12

    ISTANBUL - The sixth package introduced by the government to fight against the economic slowdown aims to help private sector companies obtain loans from banks. The ’Credit Guarantee Fund’ will act as a guarantor for 60 percent of credit firms obtain from banks, according to the arrangement

    Aiming to ease the impact of the economic slowdown, the Justice and Development Party, or AKP, government has introduced its sixth "measures package," this time focusing on bank loans.

    The package includes plans to enhance activity and functions of the Credit Guarantee Fund that will regulate credit flow between private sector and banks.

    The KGF, whose main objective is supporting small- and medium-sized enterprises by providing a guarantee for their financing and consequently increasing the credit usage in general, will make the government a guarantor for 60 percent of loans that banks open for companies, in an attempt to beat banks’ fears concerning problems in payments. The main priorities for the KGF are to support young and female entrepreneurs, to promote innovative investments, to support exports, to increase the rate of employment and to contribute to regional development.

    According to the package, the banks will inform the KGF on collaterals received from the firms requesting credit. The bank will request the fund to be a guarantor after submitting the document concerning the company it opens credit for.

    The KGF will assess whether the credit is in line with previously designated criteria. If the collateral and the company files are in line with the criteria designated by the KGF, it will guarantee up to 60 percent of the loan. If the loan becomes overdue, the bank will launch proceedings on the firm to collect the loan. Moreover, it will apply to the KGF to request 60 percent of the amount. When it collects the amount from the company after proceedings, the bank will deposit 60 percent of the loan into the KGF. This way, the KGF will step in as a guarantor for the firm in case it fails to pay back the loan.

    Banks will offer credit in line with the regulations of the Banking Regulation and Supervision Agency, or BDDK, a top official said, requesting anonymity. The banks are afraid of opening loans for companies at present, the official said, but with the KGF implementation, the government will say, "Do not be afraid of opening loans. We guarantee them."

    In return of 1 billion Turkish Liras, the Treasury will transfer resources to the KGF, which is predicted to pledge loans as much as 10 percent of that resource, the official said.

    A legal arrangement concerning the resource the Treasury will provide for the KGF has been submitted to the Prime Ministry. The arrangement is to become a law together with a general package of precautions upon the approval of the prime minister. The Cabinet will issue a decree on how the KGF will operate, and together with the Treasury, the fund will decide on how to operate.

    Meanwhile, officials from the Treasury have launched a visit to the United States in an attempt to draw more foreign capital to Turkey and borrow from global markets at better terms. The committee, led by İbrahim Çanakcı, undersecretary of the Treasury, will inform on Turkish economy’s recent developments and investment opportunities.
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