Executive summary

The Turkish Council of Ministers rendered a Decision on 3 January 2018 amending Decision no.32 on the Protection of the Value of Turkish Currency (the Decision). Additionally, the Prime Ministry has released a Communiqué amending the existing Communiqué on Decision no.32 on the Protection of the Value of the Turkish Currency, as published in the Official Gazette dated 25 January 2018.

This Alert summarizes the Decision as amended.

Detailed discussion

The Decision states that Turkish residents are permitted to obtain loans in Turkish Lira from abroad and these loans must be obtained through banks.

However, the obtainment of loans by Turkish residents in foreign currency is restricted by the Decision.

It is stated in the Decision that Turkish residents who do not have foreign currency income cannot obtain foreign currency loans from abroad. It is important to note that, in some cases and for certain entities such as banks and financial leasing companies as provided in the Decision, it is not required to have foreign currency income in order to obtain foreign currency loans from abroad.

For foreign currency loans obtained from abroad by Turkish residents who have foreign currency income, the sum of the loan amount and the current loan balance cannot exceed the sum of last three fiscal years' foreign currency income, in the case where their loan balance is less than US$15 million. As it is also indicated in the Communiqué, for those residents who have foreign currency income, it is compulsory to certify the foreign currency income of the last three fiscal years with the documents approved by the financial advisors during the foreign currency loan requests.

Foreign currency loans (obtained from abroad or from Turkey) are not available to individual residents in Turkey and foreign-indexed loans (obtained either from abroad or Turkey) are not available to any Turkish residents.

Banks, financial leasing companies, factoring companies and financing companies can obtain loans from abroad in the framework of their own customs, provided that the provisions of the relevant legislations are reserved.

In addition to the above provisions, the Decision provides that the principal repayments and the transfer of interest and the other payments of the loans obtained from abroad should be made through banks.

Provisional articles of the Decision states that:

• Foreign currency loans that have a loan balance less than US$15 million and are obtained domestically or from abroad by Turkish residents, other than the cases specified by the Decision, cannot be renewed. In addition, foreign-indexed loans cannot be renewed as foreign-indexed loans or as foreign currency loans, other than the cases specified by the Decision.
• This Decision enters into force on 2 May 2018.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Kuzey Yeminli Mali Müsavirlik A.S. Istanbul, Turkey

• Ates Konca
  ates.konca@tr.ey.com
• Gamze Durgun
  gamze.durgun@tr.ey.com

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ATTACHMENT

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