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Turkey reduces RUSF rate for loans obtained from EBRD and IFC to 0%

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Umut Gurgey



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22 June 2021

In an effort to spur cross-border funding for Turkish borrowers, Turkey has reduced the Resource Utilization Support Fund (RUSF) rate for loans extended by the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) to 0%, i.e., zero. The relief has been introduced by way of a Presidential Decree, published in the Official Gazette dated 22 June 2021 and numbered 31519 (RUSF Relief).

What does the RUSF Relief bring?

The RUSF Relief sets out that, effective from 22 June 2021, Turkish resident borrowers other than Turkish resident banks and financial institutions (Eligible Borrowers) will not be required to deduct any RUSF on loans extended by the EBRD or the IFC.

As Turkish individuals are prohibited from obtaining foreign denominated loans, the RUSF Relief will, in practice, benefit Turkish resident corporate taxpayers, i.e., entities incorporated in Turkey, or with effective places of management in Turkey notwithstanding the fact that they are incorporated outside of Turkey.

Prior to the RUSF Relief, Eligible Borrowers were able to benefit from a taper relief in respect of RUSF rates applicable to loans (denominated in a foreign currency1) obtained from outside of Turkey, as the RUSF rates are staggered as follows:

(i) 3% of the principal amount2, if the average term of the loan is less than one year;

(ii) 1% of the principal amount, if the average term of the loan is between one (inclusive) and up to less than two years;

(iii) 0.5% of the principal amount, if the average term of the loan is between two (inclusive) and up to less than three years; and,

(iv) 0%, if the average term of such loan is three years or more,

Note that the foregoing rates are continue to be applicable to all loans that Eligible Borrowers obtain from lenders outside of Turkey, where the lender is neither the EBRD nor the IFC.

As Turkish resident banks and financial institutions had already been benefitting from a rate of 0% for foreign denominated loans obtained outside of Turkey, the RUSF Relief has not changed their positions. Turkish banks acting as intermediary in the utilization by Eligible Borrowers of loans obtained from outside of Turkey will, however, now no longer be required to deduct RUSF from loans obtained by these Eligible Borrowers from the EBRD or the IFC.


1On its face, the RUSF Relief appears to capture all kinds of loans by the EBRD and the IFC, i.e., (i) loans denominated in a currency other than Turkish Lira (TRY); (ii) as well as loans indexed to a currency other than TRY; and, (iii) loans denominated in TRY.

2Note that, for loans denominated in TRY, the RUSF is calulated over the interest amount (and not the principal.)