Turkey's Ziraat to Help Citizens Pay Off Their Credit Card Debts
(Bloomberg) -- Turkey’s biggest state-run bank will extend cheap loans to citizens struggling to pay off their credit-card debts, in a populist move designed to boost the economy before local elections in March.
Citizens will be able to borrow from Ziraat Bankasi AS to pay back their card debt to banks, President Recep Tayyip Erdogan told his party’s group meeting in parliament Tuesday.
Ziraat Bank said in a statement it will offer loans for up to two years with a 1.1 percent interest rate per month, less than half the cost of the retail loan rate on its website. Up to five years, the rate is 1.2 percent per month.
Retail credit card debt in Turkey stood at 103 billion liras ($19 billion) at the end of November, around 4 percent of all loans in the country, according to the banking regulator. Credit card debt in danger of defaulting amounted to 6.5 billion liras.
The government is trying to boost a slowing economy through incentives, tax cuts and by helping to ease payment conditions on debt, after a plunge in the lira and a consequent spike in borrowing costs proved nearly as damaging as a failed coup attempt two years ago. Turkish banks have already restructured around $20 billion of debt after the lira became one of the worst-performing major currencies last year, hurting firms’ ability to repay foreign-currency loans.
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