Lawmakers are on the verge of approving a 25 billion Turkish lira ($6.94 billion) credit guarantee fund to boost bank loans to businesses, Deputy Prime Minister Mehmet Simsek said Friday.
The fund is being increased from 2 billion liras ($555 million) in a bid to boost domestic spending and stimulate the economy.
Speaking at a meeting of company heads in Istanbul, Simsek said the bill was expected to pass through parliament on Friday night and would cover non-performing loans at up to 7 percent of all loans -- an increase from the current 3 percent.
“This is a really serious boost to the real sector,” Simsek said, referring to both the agricultural and industrial sectors.
He added: “The bill, which will go through today, will have the impact of providing collateral of up to 250 billion liras [$69.40 billion]. This is a very serious figure.”
However, he said cheap credit could only be provided in the long term if savings increased.
“The thing we should do is clear the way for the real sector by implementing structural reforms,” he said.