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AS TURKEY STRUGGLES to overcome the effects of more than a decade of chaos in its public sector finances, the private sector continues to be debilitated by restricted access to capital that threatens to limit growth.
"The single greatest ailment of the Turkish private sector is the crippling cost of capital compared with its competitors in the European Union," says Murat Gulkan, director of research at Bender Securities in Istanbul.
"The high cost of borrowing and the limited use of the capital markets put the vast majority of Turkish companies at a great disadvantage. Continued high GDP growth requires vastly improved access to capital, and right now the source of that capital is not obvious," he adds.
The owner of a pharmaceuticals firm says that lack of externally generated capital is one of the main reasons why his company has remained relatively small. "We generate enough cash to keep the business running at its current size, but we have nothing available for growth," he says. "Borrowing from banks at high interest rates is not an option.