Turkish Finance Minister Berat Albayrak said on Wednesday the government would boost banks’ capital and valuable exports and adjust taxes as part of a reform plan meant to revive an economy plagued by high inflation and a fragile currency.
Turkey’s economy tipped into recession late last year and suffered its worst quarterly contraction in nearly a decade, after a punishing currency crisis sent inflation soaring as high as 25 percent and left its companies and banks saddled with foreign-currency debt.
Albayrak, unveiling the long-awaited reform package to both Turks saddled with rising unemployment and jittery international investors, said the new measures applied to 2019 only.
The government would deliver debt securities worth 28 billion lira ($4.92 billion) to capitalize state banks and would also raise capital levels at private banks, he said. Dividend and bonus payments would be limited during an economic rebalancing period, he added.
Non-performing loans are expected to double this year at Turkish banks.
At its nadir last year, the Turkish lira lost nearly half its value against the dollar and finished the year down nearly 30 percent. The crisis — which shook global financial markets — was set off by strained US-Turkey ties, concerns over central bank independence and a build-up of leverage.
Albayrak said government loans would prioritize strategic sectors, exports and value-added and local production. He added that the government planned to integrate the country’s severance pay fund with its private retirement insurance fund.