Rates to be cut below 10 pct in line with Erdoğan’s recommendations: Deputy PM

“We will cut the rates below 10 percent without creating pressure for the banking sector in line with President Erdoğan’s recommendations,” he said in an exclusive interview with daily Hürriyet. 

Noting that the construction sector was one of the motor forces of the Turkish economy, he added: “This sector has positive ramifications over the whole economy, mainly in growth and employment.” 


Rates ‘oppressive’

Erdoğan had once again urged lenders to reduce interest rates for home purchases to around 9 percent, describing high interest rates as “oppressive,” in a speech on Aug. 4. 

He has repeatedly said Turkey’s economy remained strong in the wake of last month’s failed military coup and has long advocated lower interest rates.

Mehmet Ali Akben from the Banking Regulation and Supervision Agency (BDDK) then told Anadolu Agency that they expected a downward revision in consumer, corporate and housing loans in a meeting with the lenders. 

Canikli also noted the rate cut by the Central Bank by 25 percentage points a couple of days after the failed coup attempt of July 15 actually showed high confidence in the Turkish economy. 

“In the past, some hesitations could be the case about cutting rates. I do not say this as a criticism, but just as an evaluation. Our president noted this as well, urging people to be confident about their society and the economy,” he said, adding that no negative development was seen in the markets after the latest rate cut despite the failed coup attempt. 


New structure to abolish obstacles before investments

Canikli also elaborated on details of the planned incentives to attract investors to Turkey. 

“We are now developing a new structure which will clear away any obstacles before investments and bring about a flexible incentive system. We will create a board of ministers under the guidance of the prime minister. This board will abolish all civil service obstacles and deal with any key strategic investments directly,” he said, adding that with the establishment of the planned sovereign wealth fund, it would be much easier to finance mega projects. 

A draft law for the establishment of the Sovereign Wealth Fund of Turkey was sent to parliament in a bid to create an additional 1.5 percent contribution to annual growth in the next decade on Aug. 2. 

The draft included various new regulations in the fields of taxation, public energy projects and investments.

In the meantime, the fund will create its own resources to finance the country’s mega projects and ease the burden of the banks in the finance sector.