Turkish Finance Minister Simsek urges banks to shift focus from consumer loans to export financing

Turkish Finance Minister Mehmet Simsek emphasized the pressing need to recalibrate lending practices away from consumer loans and towards fostering export financing, underlining the pivotal role of private banks in supporting the real economy.

In a resounding address at the 66th General Assembly of the Turkish Banks Association, Simsek said that the priority of his government was to further strengthen financial stability.

“Our policies of simplification and tightening will continue. We will ensure the alignment of products from the Central Bank with participation finance,” he said

He continued:

"The need for rebalancing our economy is crystal clear. We are shaping our policies in line with this requirement. In the short term, our priority is to ensure stable predictability. We anticipate a growth rate of 4.5% in 2023. It is likely that we are nearing the end of monetary tightening. We are approaching that phase. Therefore, the possibility of a relaxation has increased starting from the second half of 2024."

According to Simsek, the financial sector in Turkey has witnessed the emergence of capital flows streaming into the capital markets, instilling renewed vigor into the economy.

Drawing attention to the evolving international perception of Turkey's economic prowess, Simsek also pointed to the favorable stance adopted by international credit rating agencies. Notably, one institution had even reevaluated its outlook on the nation's banking sector, transitioning it from stable to positive—a significant endorsement of the strides the country has made.

"We expect the sector to enhance its foreign financing. We expect them to act in line with our program for the disinflation process. The financing of exports is particularly important. The era in which private banks primarily focused on consumer loans should be left behind. This is unsustainable, and private banks no longer have valid justifications in this regard," Simsek said and added that uninterrupted access to financing for the real sector is crucial for sustaining growth in Turkey.