Erdoğan vows to continue fight against 'interest rate lobby'

Erdoğan vows to continue fight against 'interest rate lobby'

Erdoğan vows to continue fight against interest rate lobby

DHA photo

President Recep Tayyip Erdoğan has repeated his opposition to higher interest rates and vowed to continue fighting against the “interest rate lobby,” speaking on Feb. 26 at the opening ceremony of Vakıfbank Participation Bank, Turkey’s sixth Islamic lender. 

“The interest rate system is not fair. It is ruthless. Can any entrepreneur compete with interest rates at around 15-17 percent?” Erdoğan said. 

“I fought against this during my prime ministry term. As the president, I’m continuing to fighting against it. As we have always mentioned, interest rates are 0.5 percent in the U.S., negative in Japan, and at 0.25, 0.5, 1 or 2 percent in Europe. What about us? We are around double digits. When commission payments are added, the rate increases to 15-16 percent. Can entrepreneurs in Turkey make new investments, create jobs, perform manufacturing activities or compete with others in such high rate climate?” he added. 

Erdoğan stated that the Vakıfbank Participation Bank was the “product of a 20-year dream.” 

“We may be late in this field [Islamic banking], but I am sure we will show progress in a very short time,” he said. 

Halkbank ‘lagging behind’

Vakıfbank Participation Bank has become the sixth Islamic lender in Turkey. It is expected to start with around 120 employees at its headquarters, before reaching 30 branches and 500 employees by the end of this year. Turkey opened its first state-owned Islamic bank, Ziraat Participation Bank, in May 2015. 

President Erdoğan vowed that Ankara would continue to give every support to the domestic Islamic finance system.

“The share of Islamic banking is around 5 percent now, and this shows [there is] more to do. A target was earlier defined to increase this share to 15 percent by 2025, but I believe this is not enough. We must raise this up to 25 percent,” he added. 

He also said Halkbank, another state-run bank, should speed up its process of becoming an Islamic bank.