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Our Information Note on the latest developments concerning the budget of local authorities, credit guarantee institutions and commercial receivable insurances as a further COVID-19 measure has been published.

Information Note:

The Latest Developments concerning the Budget of Local Authorities, Credit Guarantee Institutions and Commercial Receivable Insurances as a further COVID—19 Measure








The Official Gazette dated 29 March 2020 and 31083 contained a number of presidential decrees introducing additional measures to mitigate the adverse effects of COVID-19. Accordingly, municipalities have been indirectly provided with funds, the access of small and medium sized enterprises (“SMEs”) to financing has been simplified and the credit insurance regime, facilitating the securing of receivables of SMEs, has been provided with State support through reinsurance.


Pursuant to Presidential Decree No. 2323 dated 29 March 2020 (the “Decree No. 2323”), a provisional article has been included in the Principles on the Deductions from the General Budget Tax Revenue Allocations for the Debt of Metropolitan Municipalities, Special Provincial Administrations, Municipalities and Related Institutions introduced on the basis the Council of Ministers Decision No. 2010/238 dated 15 March 2010 (the “Principles”).

Law No. 5779 on the General Budget Tax Revenue Allocations to Special Provincial Administrations and Municipalities[1] (the “Municipality Tax Allocation Law”) stipulates that special provincial administrations and municipalities are each month allocated a certain portion from the total amount of the general tax revenue budget. The calculation method pertaining to such portion has been set out in the Principles.

According to the Principles, such calculation involves the determination of the amount to be allocated from the total general tax revenue budget to local authority units, taking into account the debt owed by such local authority unit to public institutions and the pro rata distribution of any deductions (on the basis of such debt owed) to the relevant public institution in line with the mechanism described in the Principles. However, with the adoption of Decree No. 2323, the rate of such deduction has been reduced to 0% for the months April, May and June 2020. In other words, the amounts allocated to special provincial administrations, municipalities and their related institutions from the total general tax revenue budget will not be subject to any deduction (corresponding to the debt of such entities owed to public institutions) for three months.

The intention behind this new regulation is to provide local authorities with additional funds in order to enable them to cope with the outbreak of the COVID-19 pandemic. 


The provisions of Decree No. 2016/9538 on the Treasury Support Provided to Credit Guarantee Institutions dated 31 October 2016 which regulate the principles pertaining to loans provided by lenders on the basis of the surety provided by credit guarantee institutions (“CGIs”) (the “CGI Treasury Support Decree”) have been amended by Presidential Decree No. 2325 dated 29 March 2020 (the “Decree No. 2325”).

Our Information Note dated 30 March 2020 contains information on CGIs and legislative amendments in relation to such CGIs as part of the government’s COVID-19 measures. [2] On the basis of Decree No. 2325, the CGI Treasury Support Decree has now been brought in line with the regulations described in our previous Information Note and introduces certain additional regulations which are as follows:

  • Türkiye Kalkınma ve Yatırım Bankası A.Ş. has been included in the list of a group of lenders;

  • the total amount of surety provided CGIs has been increased from TL 250 billion to TL 500 billion;

  • the maximum  amounts to be provided by CGIs have now been determined as (i) TL 100 thousand for real persons; (ii) TL 35 million for entities qualifying as SMEs; and (iii) TL 250 million for legal entities other than SMEs, pursuant to the additional article introduced to the CGI Treasury Support Decree. The maximum surety amount for SMEs will be TL 50 million and TL 350 million for legal entities other than SMEs, respectively, until 31 December 2020;

  • a new article on the time frame in respect of loans to become non-performing loans, which now harmonises the regulation with the amendments of the banking legislation, has been added to the CGI Treasury Support Decree[3]; and

  • provisional article 6 inserted into the CGI Treasury Support Decree by way of Decree No. 2325 now loosens the conditions to be satisfied to benefit from the surety provided by CGIs until 31 December 2020.

The amendments of the CGI Treasury Support Decree that are in line with last week’s amendments pertaining to CGIs are intended to mitigate the effects of the COVID-19 pandemic by increasing liquidity in the market and facilitating persons adversely affected by COVID-19 to gain access to financing.


Article 33/A of the Insurance Law No. 5684[4] has authorised the Coordination Centre for Extraordinary Risks (Olağan Dışı Riskler Yönetim Merkezi) (the “Centre”) to deal with unsecured risks in the market during extraordinary circumstances. As such, the Centre is responsible for coordinating the establishment of insurance and reinsurance coverage during extraordinary times for risks not existent in the market previously. The Insurance Law No. 5684 further provides that the type of risk to be managed by the Centre, how the premium support will be provided and the extent of the reinsurance to be provided by the State are issues that will be determined on the basis of a presidential decree.

The Presidential Decree No. 2326 on the State’s Reinsurance Support to the Commercial Receivable Insurance System dated 29 March 2020 (the “Decree No. 2326”) has been published in accordance with such purpose.

The objective of Decree No. 2326 is the promotion of the “State-backed commercial receivable insurance” (“devlet destekli ticari alacak sigortası”) (a “Receivable Insurance”) provided to SMEs that are affected, or highly likely to be affected, by COVID-19. This is to provide coverage for potential payment defaults of SMEs’ unsecured receivables from deferred sales. Decree No. 2326 provides for a reinsurance by the State for risks that are above a certain loss ratio and are to be dealt with by the Centre (due to not being covered by a Receivable Insurance). Such support will be available with respect to insurance policies taken out between 1 April 2020 and 1 April 2021.

This support mechanism aims to enhance the creditworthiness of SMEs by preventing any deficit in their balance sheets due to the COVID-19 pandemic.


These amendments aim to mitigate against the adverse effects of the continuing COVID-19 pandemic on certain specific sectors and the economy as a whole.


For more information please contact Bezen & Partners:

Yeşim Bezen (Telephone + 90 212 366 6804, E-mail [email protected])

Serdar Bezen (Telephone +90 212 366 6803, E-mail [email protected])



[1] Published in the Official Gazette dated 15 July 2008 and numbered 26937.

[2] Please click here to access the relevant information note.

[3] Non-performing loans are defined in the Regulation on the Principles and Procedures concerning the Classification of Loans and published in the Official Gazette dated 22 June 2016 and numbered 29750 (the “Regulation”). Accordingly, receivables satisfying the conditions foreseen in such Regulation for 90 days are classified as non-performing. The relevant amendment discussed herein extends such period to 180 days.

[4] Published in the Official Gazette dated 14 June 2007 and numbered 26552.