Turkey announces restrictions on using credit card for foreign travel 

Ankara [Turkey], August 1 (ANI): Turkey's banking watchdog has announced additional restrictions to support the country's tightening drive, including stopping permitting credit card payments by installment for foreign travel, like flights, travel agency fees and accommodation, Turkey-based Daily Sabah reported. 
The decision which hit airline shares and was witnessed as curbing foreign currency outflows, was one of two measures announced by the Banking Regulation and Supervision Agency (BDDK) on Monday. It said these measures were among coordinated steps to strengthen financial stability, according to Daily Sabah report. 
Recently, the Turkish authorities have taken measures aimed at controlling high inflation and reducing domestic demand, with the central bank increasing interest rates by 900 basis points in two months in addition to other tightening measures, Daily Sabah reported. 
Last week, Turkey's central bank announced new steps that included increasing the monthly maximum interest rate on credit card cash usage and overdraft accounts. It said that the increase was made to control inflation and balance domestic demand.
The measures came days after the Central Bank of the Republic of Turkey (CBRT) reduced its benchmark policy rate by 250 basis points to 17.5 per cent, the highest level since October 2021 and committed to more tightening.
The CBRT in the past two months has marked a reversal from an easing drive that saw that the bank slashed its official borrowing costs to 8.5 per cent from 19 per cent since 2021, Daily Sabah reported. 
According to tourist operators, they have been hit by soaring costs and a decline in the Turkish lira in recent years. Tourist operators have said that the Turkish lira has lost half its value against the US dollar since end-2021, with travellers commonly using credit cards to finance trips. 
Cem Polatoglu, spokesperson of a tour operators’ platform, said, "Almost all of my clients were paying by installments," noting an average trip for two costs around TL 50,000 (USD 1,850)." Polatoglu further said, “The number of people who can pay this amount in one go is very few," Daily Sabah reported. 
He said, "The logic (of the step) is ‘citizens shouldn’t go abroad and spend foreign currency." He further added that the foreign travel sector was also being hit by rising difficulties faced by the people of Turkey in securing tourist visas.
Polatoglu forecast a sharp fall in the numbers going abroad after an increase in spending by Turkish nationals abroad in the first half of the year to USD 3.17 billion, which shows an 84 per cent increase from the same period in 2022 with such spending being made using credit card. 
The credit card move also affected airline share prices, with Turkish Airlines witnessing a reduction of 1.3 per cent and the airline Pegasus dipping by 2.3 per cent, according to the report. 
In the statement released on Monday, Banking Regulation and Supervision Agency (BDDK) said that it has taken the decision to raise the risk weightings taken into account in calculating capital adequacy standard ratios for consumer loans, personal credit cards and vehicle loans.
Economists expect inflation to witness an increase by year-end due to the lira’s decline and various tax hikes. The inflation had peaked at a 24-year high of 85.5 per cent in October last year, as per the news report. 
Last week, the Turkish central bank increased its end-2023 inflation forecast to 58 per cent, committing to continue gradual monetary tightening. In its previous inflation report three months ago, the bank’s year-end forecast stood at 22.3 per cent. The end-2024 inflation prediction has been raised to 33 per cent from 8.8 per cent. (ANI)