Coming back from the brink of crisis in the fall of 2016, the Turkish economy has regained its growth momentum thanks to global funds returning to emerging economies — the result of the United States’ failure to follow through with promised reforms — as well as supportive measures by the Turkish government, including tax reductions and the encouragement of loans. The rebound, however, has come at a price. Inflation has climbed to double-digit figures, with interest rates on bank deposits and loans following suit.

As a result of government moves to avert the crisis, the budget deficit widened, stoking the need for borrowing. The Treasury became a major borrower on the financial market, pushing up interest rates further. The government is now pressing banks to reduce interest rates, having forgotten its own role in the Treasury’s borrowing demand and the double-digit inflation.

During a June 21 gathering at the Istanbul Chamber of Industry (ISO), entrepreneurs complained about the industrial sector’s heavy indebtedness and especially the high interest rates on loans. The financial profile of Turkey’s 500 largest industrial enterprises today is the worst in the past decade, with about 62% of company resources secured through borrowing.

Stressing that the industrial sector was heavily indebted in dollars, ISO President Erdal Bahcivan called for a new-generation of development banking to allow the sector to borrow long term and in Turkish liras. “The interest rates on loans, ranging between 16% and 20%, are a major obstacle for production and economic development,” he said.