The credit policies adopted by Türkiye’s central bank have this year enabled small and medium-sized businesses (SMEs) to grab their highest-ever share of banking sector loans, the monetary authority’s deputy governor said.

The SMEs took TL 558 billion ($30 billion) of the TL 1.2 trillion in total corporate loans extended by commercial banks in the nine months to September, according to data compiled by the Central Bank of the Republic of Türkiye (CBRT).

"This is the highest share and amount of banking sector loans that SMEs received in history," CBRT Deputy Governor Taha Çakmak told Reuters in a written response to questions.

The Turkish government’s new economic program prioritizes low-interest rates to boost exports, production and investments, aiming to lower inflation, which reached 83.45% in September, and flip the country’s chronic current account deficits to a surplus.

The central bank has cut its policy rate by 200 basis points in the last two months, citing indications of an economic slowdown. Known for opposing higher borrowing costs, President Recep Tayyip Erdoğan has called on the bank to lower rates to single digits by the end of the year.

The central bank has also worked to reduce a widening gap between its policy rate and borrowing rates to enable cheaper access to financing.

It has set SMEs as a priority by excluding loans extended to them from collateral requirements imposed on creditor banks.

Çakmak said corporate loan interest rates had fallen to around 18% this year from an average of 23% in 2021, and that the share of borrowing in the Turkish lira had increased in response to policies prioritizing the currency.

"The current policy mix is not causing inflationary pressure and resources are being directed towards areas necessary for sustainable economic activity," he said.