Turkish PM Yıldırım urges banks to lower interest rates

ISTANBUL

Prime Minister Binali Yıldırım has once again called on banks to lower interest rates, while adding that it is the government’s duty to push down the inflation rate.

Speaking at the 61st General Board Meeting of the Turkish Banks’ Association (TBB) on May 7, Yıldırım also said a campaign would be kicked off to offer housing loans for much lower interest rates, led by state-run Ziraat Bank.

“In his speech, [TBB President Hüseyin] Aydın said banks did not earn big from high interest rates. So if they do not, then lower interest rates. It will be a win-win game for both you and the people,” he said.

“In the meantime, we will not stand idly. We will take further measures to combat high inflation,” Yıldırım said, adding that the aim is to “bring down inflation to single digits again.”

Turkey’s economy has no big problems other than high inflation and interest rates, he also claimed.

Double-digit inflation is a major worry for investors along with Turkey’s widening current account deficit. Concerns about the economic outlook have helped push the lira to record lows in recent days.
Turkey’s inflation climbed to almost 11 percent in April, while current account deficit stood at $4.152 billion in February, data showed.

Yıldırım noted that recently announced incentives would help Turkey resolve its current account gap as well.

Saying that the two biggest reasons behind this gap were Turkey’s high energy bill and its dependence on imported raw materials and intermediary products to produce.

“Through 23 projects that we are offering incentives of 135 billion Turkish Liras for, the current account gap will decrease by $20 billion, falling from $50 billion on an annual basis to $30 billion,” Yıldırım said.

He also noted that Ziraat Bank would start a campaign soon to offer housing loans with much lower interest rates and others would follow the state-run lender.

“In order to diminish the housing stock, Ziraat and other lenders will soon announce loan campaigns that will be attractive for potential buyers,” Yıldırım said, adding that details would be announced later.

According to sector representatives, housing loan rates have recently increased to their highest level in of the last 8.5 years.