Turkey launches $15.4B aid package to fight and weather impact of Covid-19

President Recep Tayyip Erdogan launched on Wednesday over 20 financial measures being taken by Turkey to combat the impact of the coronavirus pandemic.

The wide-ranging aid package dubbed Economic Stability Shield targets business, individuals, companies and various industries affected by the pandemic and vulnerable citizens hit by the virus-impacted economy.

Almost 4-hours long meeting the president advised nationals not to leave home unless necessary for three weeks and to minimise social contact until the threat of the coronavirus recedes.

“None of our citizens must leave their homes or get into contact with anyone, unless absolutely necessary, until the threat disappears,” Erdogan said in a speech after a special meeting in Ankara to tackle the coronavirus outbreak.

Following an economic turbulence in 2018 the Turkish economy rebounded strongly in the latter part of 2019, growing 6 percent in the fourth quarter after government steps to boost economic activity.

As part of efforts to keep the economy on track, Turkey's central bank on Tuesday cut its key interest rate by 100 basis points on Tuesday at an earlier-than-scheduled policy meeting, and took steps to support volatile financial markets.

Over $15 billion aid package

Erdogan also said Turkey would postpone debt payments and reduce the tax burden on various sectors as part of a $15.4 billion, with additional fiscal help, package of new measures to support the economy and lessen the impact of the coronavirus pandemic.

Turkey will postpone for six months the April, May and June VAT and social security payments of retail, iron-steel, automotive, logistics-transportation, cinema-theatre, housing, food-beverage, textile-garment and event-organisation sectors.

Accommodation tax will be waived until November and for hotel rentals, Turkey postponed easement, revenue share fees for April, May and June for 6 months.

The VAT rate for domestic flights lowered from 18 percent to 1 percent for 3 months and businesses affected by the measures against Covid-19 outbreak can delay loan/credit and interest payments a minimum of three months, and will be supported by additional financial liquidity if needed.

Exporters will be given stock financing assistance to maintain capacity during temporary slowdown in exports.

Turkish public bank Halkbank to postpone credit, interest and debt payments for 3 months of businesses and artists negatively affected during this period.

The administration will increase the Credit Guarantee Fund limit from $3.8 billion to $7.7 billion, and credit will first be given to businesses and SMEs (Small and Medium Enterprise) with a collateral deficit and need of liquidity.

President Erdogan also said that the government will promote credit packages with favourable and advantageous conditions for Turkish nationals.

He also noted that the government will increase the amount loanable to residences valued below $77,000 from 80 percent to 90 percent, and reduce the minimum payment to 10 percent.

Turkey will continue to support the minimum wage fund and flexible, remote working models will be made more efficient.

Ankara will implement the Short-time Working Payment system, which will provide temporary income support, and the process to receive it will be eased and accelerated.

Lowest retirement pension to be increased to 1,500 lira ($232) and holiday bonus for retirees to be paid in April.

Additional 2 billion lira ($308 million) will be provided for financial aid to families in need according to the criteria set by Ministry of Labour and Social Security.

To ensure continuity in employment, make-up time compensation will be increased from two months to four months.

Turkey to initiate alternative channels in line with the priorities determined for production and retail in case of disruption in global sourcing chains.

The government is also launching a periodic follow-up program consisting of social and home health services for the elderly who are 80 or older and live alone.

Turkey’s President Erdogan said Turkish Airlines is one of the entities most affected by coronavirus and the global aviation company will receive the necessary support.