Exporters who faced death have settled for malaria

According to a report by Bloomberg Businessweek Turkey, exporters are caught in a bottleneck to produce and export due to tightening policies on one hand and high interest rates on the other. The rediscount credit interest rates provided by Eximbank are set at 35 percent. Meanwhile, interest rates on loans provided by private banks are reaching 55-60 percent. Exporters state that, at times, daily interest rates on loans from private banks climb as high as 65-70 percent. In particular, endless credit procedures, interest rates reaching 55-60 percent, and the fact that loans are still not being activated despite these rates are among the primary complaints.

Stating that difficult days await Turkish industrialists over the next six months, Şeref Fayat, President of the TOBB Ready-to-Wear and Apparel Sector Council, notes that if the cash flow continues to be this constrained, many firms will declare bankruptcy. “With the newly announced Central Bank (TCMB) decision, access to credit has begun to be provided, albeit at a high cost. However, the gap between Eximbank credit interest rates and those of private banks has widened significantly. While exporters use Eximbank rediscount loans that do not exceed 35 percent, they face interest rates of 55-60 percent and even 65-70 percent in daily variable interest rates at private banks,” says Şeref Fayat, and continues:

“On the other hand, the limits of collateral, which are valued according to inflation, are becoming insufficient. Therefore, another dilemma arises before us. The limits on collateral need to be re-evaluated. In this situation, a challenging 5-6 month period awaits the industrialist.” Since the TCMB and the economic management took office, rediscount credit limits have been increased 10-fold. The daily rediscount credit limit, which was 300 million liras until mid-July, was first increased to 1.5 billion liras on July 25, and then to 3 billion liras on September 12. At the same time, during the limit increase, the TCMB emphasized that the share of SMEs in the utilization of rediscount loans would be increased and that export performance would continue to be taken into account. However, the limit increases have not been sufficient to solve the exporters' problems. Şeref Fayat, stating that in addition to all this, the gap between private bank interest rates and Eximbank interest rates has widened too much, says, “Although daily TL rediscount loans were recently increased from 300 million liras to 3 billion liras, that is, 10-fold, even this limit is not enough. Markets are having great difficulty finding affordable credit for cash flow.”

News Source: 12punto