* PM vows no unnecessary government spending in 2017
* Easier credit for firms, banks can restructure loans
* Growth seen negative in Q3, lira has tumbled 20 pct
(Recasts with steps announced)
By Ercan Gurses and Nevzat Devranoglu
ANKARA, Dec 8 Turkey's prime minister said on
Thursday the government would make no unnecessary spending next
year but would offer easier credit for the private sector as he
announced measures to boost a stalling economy and shore up the
The steps outlined by Binali Yildirim include cheaper
funding for companies, easier loan restructuring for banks, and
a tighter lid on public spending.
"There won't be any unnecessary spending in 2017. No new
buildings, no new car purchases, and no trivial trips by the
government," Yildirim told a news conference, flanked by cabinet
The gloomy economic outlook marks a sharp turnaround for
Turkey, once considered one of the world's most promising
emerging markets thanks to its youthful population and years of
rapid growth under the ruling AK Party.
Investors are no longer as optimistic. Third quarter growth
figures due next week are expected to have turned negative for
the first quarter since 2009.
Yildirim said 250 billion lira ($70 billion) in loans would
be created to help struggling firms, while there would be
additional incentives for investments in production and tax
refunds on construction. Some social security premiums would be
postponed for employers.
The banking regulator had also agreed to let banks
restructure loans to the private sector, he said.
But he said the measures would not require any additional
government borrowing or compromise budget discipline. No new
state employees would be taken on next year, beyond around
60,000 mostly police and teachers already agreed.
Yildirim also announced a 7.5 percent cap on the deposit
rate banks can offer government agencies, a bid to bring down
the cost of borrowing, confirming a Reuters report.
The government's economic coordination committee has met
several times in recent weeks in response to the lira's steep
decline. The currency has fallen as much as 20 percent this
year, hit by a strong U.S. dollar and concern about the
crackdown that followed a failed coup in July.
President Tayyip Erdogan has said Turks should convert forex
into gold or lira, a call heeded by some institutions and
individuals. The lira has since recovered somewhat.
But Yildirim's steps left some economists unconvinced.
"Contrary to market expectations for measures to address
currency weakness, the package was mostly about credit growth,"
said Nomura economist Inan Demir, describing the response to the
lira weakness as "underwhelming".
Yildirim said state institutions would avoid contracts in
foreign currency unless strictly necessary and said existing
contracts would be converted to lira where possible. He said
Erdogan's call was already paying dividends.
Turkey's postal service on Thursday converted $172 million
into lira, following similar steps by the defence ministry,
energy market regulator and stock exchange.
($1 = 3.4610 liras)
(Additional reporting by Ece Toksabay, Humeyra Pamuk and Tuvan
Gumrukcu; Writing by Nick Tattersall; Editing by Angus MacSwan)