(Corrects May 23 headline and first paragraph to stress package boosts exports)
By Ebru Tuncay
ISTANBUL (Reuters) - Turkey’s state banks will provide a 30-billion lira ($4.9 billion) financing package to help bail out some exporting sectors such as manufacturing that were hit hard by last year’s currency crisis, Finance Minister Berat Albayrak said on Thursday.
Three big state banks will provide the funding by year end, Albayrak said as he announced the second state-backed package in less than two months meant to revive an economy plagued by bad debt, recession, and high inflation.
The first package announced on April 10, also worth about $4.9 billion, targeted banks. The second package focuses on Turkey’s automotive and chemical sectors, among others, which are largely dependent on imports of raw materials for production before they are able to export processed goods.
“Import-dependent sectors, as well as sectors contributing to employment, showing a high trade deficit are going to be supported by the financing package,” Albayrak said at a presentation in Istanbul.
It will support raw material, intermediate goods, agriculture and machinery-manufacturing sectors, he said. The financing from Ziraat Bank, Halk Bank and Vakif Bank would provide loans with up to two years without principal repayment, as well as up to 10 years of maturity.
The Turkish lira weakened on Thursday and did not rebound after Albayrak’s announcement.
“It looks like they are now taking the issue more seriously given the size and scope of the program,” said Nikolay Markov, a senior economist at Pictet Asset Management. “But these measures do not help dealing with the fundamental macro problems (and they) should be considered as temporary measures.”
Years of booming growth and heavy borrowing in foreign currencies has left Turkish companies and banks saddled with bad debt. Only about $16 billion of the $400 billion of loans in Turkey’s banking sector had been restructured as of March, and some analysts expect its non-performing loan ratio to double by year-end to 8%.
Turkey’s current account deficit, which soared above $27 billion last year, was at the center of last year’s crisis in which the Turkish lira at its worst lost nearly half its value against the U.S. dollar.
The deficit has narrowed significantly since the recession hit domestic demand and sharply raised import prices, and stood at $589 million in March.
Albayrak said he expected it would register a surplus from June onwards, and hoped the economy had already emerged from recession. Turkey tipped into recession late last year and a Reuters poll expects the economy to log a slight contraction this year.
Investors have so far given Ankara’s high-stakes bailout effort a lukewarm a reception. It also includes a plan to sweep bad energy debt from the balance sheets of banks, which Reuters reported hit snags in recent weeks as lenders held out for more protections.
An executive at privately-held Garanti Bank, Ebru Edin, said separately on Thursday that plan would include four or five Turkish power plants with a total of $1.5-2 billion in problem loans. Companies that are transferred to the energy debt fund would not be sold for at least three years, she was quoted as telling state-owned Anadolu agency.
Additional reporting by Ali Kucukgocmen, Ezgi Erkoyun, Daren Butler and Tom Arnold; Writing by Jonathan Spicer; Editing by Toby Chopra