This content is from: Local Insights

Turkey

Article 17 of the Decree on the Protection of the Value of the Turkish Currency was amended on July 26 2001 to facilitate the procurement of loans from foreign financial agencies. Before the amendment, foreign loans with an average maturity of 365 days had to register with the External Debt Log maintained at the Turkish Treasury within 30 days following the execution of the loan agreement. Previously, the borrower applied in person to the Treasury with a petition, accompanied by a copy of the loan agreement, to register their foreign loan.

The crucial change that introduced by Article 17 is that, after October 31 2001, applications to the External Debt Log will be made to the Turkish Central Bank instead of the Treasury. This amendment also shifts the burden of registration from the borrower to the local bank or special financial institution acting as an intermediary to register the loan with the External Debt Log. Each application will continue to be registered under a different number and the applying bank or financial institution will do the follow-up and finalize this registration process.

These amendments to Article 17 intend to facilitate the procurement of foreign loans by lessening the bureaucratic requirements imposed on borrowers since the banks will be in charge of the registration process once the loan agreement is executed. Furthermore, it serves to pave the way for local entrepreneurs to invest in infrastructure projects with fewer obstacles.

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