2/2/2018
Deputy Prime Minister Mehmet Şimşek's Noteworthy Statements
"Treasury plans to diversify markets this year for USD 6.5 billion foreign borrowing. We may make borrowing from Chinese and Russian markets. Under the system we put now, who has no foreign currency income will not be able make borrowing in foreign currency. Credit debts of about 26 thousand companies whose credit balance is below of USD 15 million correspond to about USD 46 billion. We think these companies to be directed to make borrowing on TL will not constitute pressure over banking system. Treasury cannot guarantee bank credits forever. We expect over USD 12 billion direct investment in 2018. We are fully determined to decrease inflation this year."
Deputy Prime Minister Mehmet Şimşek in charge of economy has made noteworthy statements to Dünya newspaper. You may find here important extracts of Şimşek's statements. Reporting last year Treasury's debt rollover ratio was higher than planned in the beginning of year, Şimşek said, "But, we focused on foreign borrowing for preventing flow of domestic sources to public. Actually, we normally borrow USD 6-6.5 billion from abroad but last year we borrowed about USD 9.7 billion. We envisage debt rollover ratio for this year to be 110%. Treasury will do its best again for directing domestic sources as to support private sector”. Reporting Treasury will diversify both the instruments and geography within the context of compatibility of market conditions in foreign borrowing, Şimşek has noted that they would diversify USD 6.5 billion d foreign borrowing plans this year, that they also planned to make borrowing in Chinese and Russian markets. Noting "cost of borrowing on foreign currency is much higher than that TL", Şimşek said, "The regulation we made is that: we expect this system manage risks in a permanent way or we set conditions for them to assume lesser risks. In other word, if you have income on foreign currency, you may borrow on foreign currency. If you make an investment, if you intend to buy machinery, equipments you may make borrowing on foreign currency. If you are involved in public-private sector partnership projects, you are allowed to do borrowing this way. This is actually what that should to be. We make doors wide open to investors, exporters. But, who has not foreign currency income should not make borrowing on foreign currency and increase the country risk. Volatility of Exchange rate has to be ended. We will say to those who has more capacity ‘you do not have foreign currency income, but if you are big and claim to manage the risks, go ahead'. Hedging regulation will be completed in the first half of this year.” "Debts of companies whose credit balance is below of USD 15 million correspond to about USD 46 billion" “We better be realistic. In general sense, world is face to face with a heavy debt burden. We week loan for growing but debt limit our growth in medium-long term. As of October 2017, there is USD 7.4 billion foreign currency position surplus up to one year in companies sector . 84% of total foreign currency loans used by about 28 thousand companies is the foreign currency loans used by 2.118 companies with credit balance on USD 15 million and over. The remainder of other 26 thousand companies is below of USD 15 million. Credits used by these companies constitute about 16% of total foreign currency loans. Since total cash foreign currency loans used is about USD 286 billion 624 million, 16% of this corresponds to about USD46 billion. We think these companies to be directed to make borrowing on TL will not constitute pressure over banking system.” "Treasury cannot give guarantee for bank credits forever” Şimşek has also commented on KGF support and said, "KGF's quality changed. There was no restriction last year. This year we have allotted TL 55 billion and minimum 2/3 of this figure would be made available to manufacturing and export. The guarantee amount is relatively moderate this year but the quality high. To what extent it goes? We do not plan to force Treasury to guarantee banking system forever. This is limited. We took an extraordinary precaution for easing the bottleneck in credit markets for preventing economy to suffer recession. This is a successful execution.” "We expect over USD 12 billion direct investment in 2018" Reporting there is a serious increase in direct investment recently, Şimşek has noted that in 2017 average of recent 15 years was reached, direct investments in 2018 were believed to be stronger than that of 2017 and than averages of recent 15 years, expected to be over USD 12 billion. Şimşek has finally noted that inflation was a problem but they have every determination to decrease inflation.
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