News and developments
Economic Measures Taken Against The Coronavirus (COVID-19) Outbreak
Numerous countries around the world continue to take measures against the economic challenges that the Coronavirus (COVID-19) outbreak can cause in their countries. Canada, France and the United Kingdom are among those countries who recently announced comprehensive measure packages to tackle economic disruptions. Meanwhile, crucial interest rate cut decisions were taken by the Central Banks in Norway and the United States of America. With this regard, the measures against the possible effects of the epidemic in our country were announced by the Presidency, the Central Bank and the Banking Regulation and Supervision Agency along with the public banks and private banks
II. MEASURES TAKEN IN TURKEY AGAINST THE OUTBREAK
a. Measures Announced by the Presidency
On 18 March 2020, the economic measures planned to be taken against the Corona Virus epidemic were announced by the President Erdoğan with the new economic package (“Package”) called “Economic Stability Shield” The 19-Article Package, suggests the allocation of a total amount of 100 Billion Turkish Liras for the measures to be taken, whereas the significant part of the Package is related to the financial and banking sectors, which face the risk of being affected the most by the possible recession in the economy. Some of the introduced measures are as follows.
- Postponing the capital and interest payments of the credits used by the companies that have adversaries in cash flows due to the epidemic for at least 3 months and providing additional financial support if necessary.
- Providing stock financing support to exporters to maintain capacity utilization during the periodic slowdown in exports.
- Postponement of capital and interest payments of credit debts to Halkbank for April, May and June, for the merchants and craftsmen who declare that their commercial activities are adversely affected by the outbreak upon their demand.
- Increasing the Credit Guarantee Fund limit from 25 Billion Turkish Liras to 50 Billion Turkish Liras and prioritising the companies and SMEs who have liquidity needs and collateral deficits due to the negative impact of the epidemic on their commercial activities.
- Encouraging the introduction of social credit packages for citizens.
- Increasing the credible amount from 80% to 90% and reducing the minimum down payment to 10% in housing loans that will be used for houses with a price below the 500 Thousand Turkish Lira threshold.
- Ensuring that companies that have defaulted in April, May and June due to the measures taken within the scope of the epidemic to have a “force majeure” indication in their credit registry.
- With the decision numbered 2020-15, CBRT Monetary Policy Board has decided to reduce the policy rate, which is the one-week repo auction interest rate from 75 per cent to 9.75 per cent.
- With the decision numbered 2020-16, the CBRT announced that,
- The liquidity the banks may need will be provided regarding the existing potentials within the day and overnight maturity,
- The swap auctions with a term of 1, 3 and 6 months in exchange for US Dollars will continue and the said auctions can be arranged in Euro and gold,
- The required reserve ratios will be reduced by 500 basis points in all types of obligations and all maturity segments for the banks who meet real credit growth conditions.
- The possibility to extend the maturity of rediscount loan repayments up to 90 days for the ones that will be due from 18 March 2020 to 30 June 2020,
- The additional commitment closing period of 12 months is granted for the Rediscounts credits with open credit commitments and rediscount credits to be used from March 18, 2020, to June 30, 2020
- The maximum maturities determined for the existing rediscount credits have been increased from 120 days to 240 days for short-term use and 720 days for longer-term use starting from March 20, 2020.