Turkish President Recep Tayyip Erdoğan’s public mandate on “Investment Program Preparations for 2019-2021 Period,” which prioritizes to preserve price stability while reducing inflation and to further strengthen fiscal discipline, was published in the Official Gazette on Oct. 11.
“Turkey is to implement the new economic program to preserve macroeconomic stability, raise production and welfare,” it said.
Stressing that Turkey’s main target is to save on public expenditures and to decrease inflation, the mandate added that “new projects will not be included in the 2019 Investment Program except for the compulsory cases within the scope of savings measures.”
He said the increase of domestic savings, narrowing of the current account deficit, strengthening of public fiscal balance and maintaining macroeconomic and financial stability are “among the main priorities of Turkey in order to achieve balanced and sustainable growth in the economy.”
Priority will be given to ongoing projects that will be completed at the shortest possible time, he added.
In the mandate, data from the New Economic Program were also presented.
In this regard, the economic growth is expected to be 2.3 percent in 2019, 3.5 percent in 2020 and 5 percent in 2021. Inflation rate is estimated to regress to 15.9 percent by the end of 2019, to 9.8 percent in 2020 and to 6 percent in 2021. The budget deficit-to-GDP is estimated at 1.8 percent in 2019, 1.9 percent in 2020 and 1.7 percent in 2021.
Restructuring of forex loans
Restructured foreign currency loans in Turkey will be converted to Turkish Liras at the Central Bank’s exchange rate in force on the day of the restructuring, a separate presidential decree said on Oct. 11.
The decree allowed the day’s lira rate to be used in companies’ restructuring of forex loans as private sector debt continues to grow.
Earlier this week, the Turkish Banks Association (TBB) called on its members to allow corporate borrowers to restructure some short-term foreign currency loans, a move that would potentially throw a lifeline to debt-burdened companies hit by the country’s currency crisis.
The TBB advised lenders on Oct. 8 to restructure cash debts below 15 million liras ($2.5 million) of businesses up to a 24-month installment due with a six month non-payment period under certain conditions.
This recommendation will be applicable for installment or spot loans with a final mature date sooner than April 30, 2019, the TBB said in a note.
Turkey’s lira has lost around 40 percent of its value against the dollar this year.