2.2.4. Export Rediscount Credits
Within the scope of Article 45 of the CBRT Law, export rediscount credits are extended in Turkish lira with a maturity up to 240 days through the Export Credit Bank of Turkey and commercial banks by the the acceptance of foreign exchange bills for rediscount, whereas repayments to the CBRT are made in foreign exchange.
Taking into account the contribution of export rediscount credits to the decrease in the current account deficit and the increase in the CBRT’s foreign exchange reserves, the credit limits were increased by USD 3 billion to USD 15 billion on 20 October 2014.
Moreover, with the changes made in export rediscount credits’ regulations on 20 October 2014,
- The credit limit per company for foreign trade capital companies was increased from USD 240 million to USD 300 million; for other companies, the limit was raised from USD 180 million to USD 250 million, whereas the entire limit can be used for credits with a maturity up to 120 days and up to 50 percent of the limit can be used for credits with a maturity of 121-240 days.
- The interest rate to be applied to export rediscount credits with up to a maturity of 120 days is the monthly LIBOR or EURIBOR rate. The cost of export rediscount credits with a maturity longer than 120 days was reduced by 20 basis points and the interest rate to be applied to these credits is the 6-month LIBOR or EURIBOR rate.
- Exporters were provided the opportunity to obtain post shipment export rediscount credits via presenting foreign exchange bills for rediscount. The bills are based on export receivables and assigned to factoring companies which then present these bills to Turkish Eximbank for endorsement.
Export rediscount credit extensions, which were USD 15.1 billion in 2013, reached USD 15.3 billion in 2014, with an outstanding balance of USD 8.5 billion as of 31 December 2014.
As a result, export rediscount credits contributed USD 13 billion to the Central Bank’s net foreign exchange reserves in 2014.