WORLD TRADE  
ORGANIZATION  G/SCM/N/123/TUR/Add.1 
26 January 2006 
 
 (06-0371) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
New and Full Notification Pursuant to Article XVI:1 of the GATT 1994  
and Article 25 of the Agreement on Subsidies and  
Countervailing Measures  
 
TURKEY 
 
Addendum  
 
 
 The following communication, dated 19 January 2 006, is being circulated at the request of the 
Delegation of Turkey.  
_______________ 
 
 
TABLE OF CONTENTS 
            
 Page
 
 
I. EXPORT SUBSIDY FOR PROGRAMME FOR AGRICULTURAL 
PRODUCTS ....................................................................................................................... .......2  
II. CREDIT PROGRAMMES ......................................................................................................3  
 
  G/SCM/N/123/TUR/Add.1 
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  I. EXPORT SUBSIDY FOR PROGRAMME FOR AGRICULTURAL PRODUCTS 
1. Title of the subsidy programme
 
The title of the subsidy programme is "Export Subsidy Programme for Agricultural Products" 
(Decree No. 2005/3). 
 
2. Period covered by the notification  
 The Decree 2005/3 of the Money-Credit and Coordination Council was announced in the 
Official Gazette dated 2 March 2005, which has been applied between 1 January  and 
31 December 2005.  
3. Policy objective and/or purpose of the subsidy
 
 The policy objective of this export subsidy pr ogramme is to develop Turkey's export potential 
in processed agricultural products.  4. Background and authority of the subsidy
 
 Authority for the subsidy is the Money-Cr edit and Coordination Council.  The Council is 
comprised of the Ministers of State, the Minister of  Agriculture, the Undersecretary of the Minister of 
Finance, the Undersecretary for State Planning Orga nization, the Undersecretary for Foreign Trade, 
the Undersecretary for Treasury and the Head of the Central Bank.  5. Form of the subsidy
 
 The subsidies are provided to produce/exporters or exporters in the form of deduction of their 
debts to the public corporations (taxes, soci al insurance premium costs, energy costs, 
telecommunication costs) from their subsidy entitlement.  6. Subsidy per unit
 
 The subsidy per product is given below: 
 
Product Rate (in US$/ton) Share of exported quantity 
eligible to receive the subsidy 
2005/3   
Cut flowers (fresh) 205 %37 
Vegetables, frozen (exc. potatoes) 79 %27 
Vegetables (dehydrated) 370 %20 
Fruits (frozen) 78 %41 
Preserves, pastes 63 %35 
Honey 65 %32 
Homogenized fruit preparations 63 %35 
Fruit juices (concentrated) 134 %17 
Olive oil 150 %100 
Prepared or preserved fish 200 %100 
Meat of poultry (excl. edible offals) 186 %100 
Edible offals of poultry 250 %22 
Eggs 6$/1000 pieces %78 
  (Table cont'd) G/SCM/N/123/TUR/Add.1 
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  Product Rate (in US$/ton) Share of exported quantity 
eligible to receive the subsidy 
Chocolate and other food preparations containing chocolate 119 %48 
Biscuits, waffles 119 %18 
Macaroni vermicelli 66 %32 
 
 The second column specifies that the subsidy will only be paid on determ ined percentage of 
the quantity exported.  This system has been used owing to the annual volume commitment of 
Turkey, originated in the WTO Agreement on Agriculture. 
 7. Statistical data permitting an assessment of the trade effects of the subsidy
 
 No statistical data permitting an assessment of th e trade effects of this subsidy is available. 
 
 
II. CREDIT PROGRAMMES 
1. Turk Eximbank in Brief  
Turk Eximbank, which was established in 1987, is  the sole official e xport credit agency in 
Turkey.  As a wholly state-owned bank, acting as the government's major e xport incentive instrument 
in Turkey's sustainable export strategy, the Bank ma intains close co-operation with the related entities 
of the government.  Turk Eximbank's policies and ope rations have been formulated to work within the 
framework of the export-led growth strategies pursued by all Turkish governments since 1980.  The Bank operates in the framework of the Banks Act a nd the regulations of the Banking Regulations and 
Supervision Agency. 
 Turk Eximbank is under the responsibility of the Prime Ministry or such other State Ministry 
as nominated by the Prime Minister.  The responsible  minister represents the General Assembly of the 
Bank within the Government.   Turk Eximbank has two branches and three liaison offices with a total staff of 358. 
 
2. The Bank's Financial Structure a nd Support to the Export Sector
 
 The Bank's main sources of funds are dir ect funding from the Treasury through capital 
injections as well as through borrowing from commercia l banks and international financial markets. 
  Turk Eximbank's financial resources are: 
 
• Capital injections 
• Domestic banks 
• International syndication loans 
• Bilateral loans from international banks 
• International bond issues 
• International financial institutions such as EDC, JBIC, IBRD, etc 
 
The Turkish Treasury makes capital contributions  to Turk Eximbank as the sole shareholder 
of the Bank.  These contributions are used to sup port Turk Eximbank's activitie s and to maintain the 
Bank's capital adequacy.  In additio n, losses incurred by Turk Eximba nk in its credit, insurance and G/SCM/N/123/TUR/Add.1 
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  guarantee transactions as a result of political risks ar e covered by Turkish Treasury, like in all the 
other officially supported ECAs. 
 
 The nominal capital of Turk Eximbank is YTL 750 million, of which YTL 658 million is paid-in as of June 2005 (there has been no capital inj ection in the last three years).  If requested, the 
Turkish Treasury supports Turk Eximbank in its funding efforts by guaranteeing the Bank's 
borrowings abroad.  As of end March 2005, 16% of  the Bank's sources used for the funding of her 
assets is paid-in capital.  This ratio indicates that Turk Eximbank, like all other ECAs in the world, 
funds her activities mainly from domestic and inte rnational sources rather than capital injections.  
Hence the Bank always reflects the cost of funding to  the rates she charged in order to secure a sound 
financial structure. 
  In this context, Turk Eximbank gives importance;  
• To be financially sustainable, 
• To help increase Turkish merchandise and project exports 
• To independently assume a broader range of risk,  
• To be a catalyst for other financial in stitutions to support Turkish exports. 
 
Turk Eximbank's identification of financial su stainability as a primary objective is driven 
mostly by its current and future international obl igations to the OECD, WTO and the EU, in which 
ECAs are expected to at lest break-even over time and eliminate all trade subsidy programmes.  Additionally, as Turk Eximbank borrows from inte rnational financial markets regularly and its 
financial soundness affects its borrowing costs, a sound financial structure gains more importance.  In 
this context, it is very important to implement effective strategies and procedures to control credit 
risk, liquidity risk, and asset/liability risk.  B esides, Turk Eximbank requests credit ratings from 
Standard & Poor's and Moody's regularly each year in order to tap the international money and capital 
markets regularly on its own, without the guarantee of the Treasury.  The Bank's management believes that credit ratings provide wider access to  capital markets and as such reduce the cost of 
borrowing. 
 
Using these sources, Turk Eximbank provid es, on the average, a total support of 
USD 6-7 billion to the export sector, annually, th rough export credit, export credit insurance and 
guarantee programmes, described below. 
 Since there is no direct transfer of government's  funds to the beneficiaries as grants or 
as credits priced below the cost of funding, we do not consider Turk Eximbank's export credit, 
insurance and guarantee programmes as "subsidy". 
 
3. Turk Eximbank's International Obligations
 
While implementing its programmes and forming strategies, Turk Eximbank is committed to 
confirming to the internationally accepted rul es and regulations set by the WTO, the OECD 
Consensus, the EU and the Berne Union.  In 19 94, Turk Eximbank became a full member of the 
Berne Union, and international association of expor t credit insurers, and has been representing Turkey 
in the Export Credits and Credit Guarantees Group (ECG) of the OECD Trade Committee since 1998, 
when Turkey became a full member of the Group.  The Bank makes regular reporting and 
notifications to the Berne Union, the ECG and the WTO.  This year, information about the Bank's 
activities has been provided to the EU officials under the "state aid" title. 
 As part of its obligations under the Custom s Union Decision, Turkey has harmonized its 
legislation with that of the EU with respect to officially supported export credits.  Within this  G/SCM/N/123/TUR/Add.1 
 Page 5 
 
 
  framework, the OECD consensus pr inciples on officially supported export credits with a repayment 
term of two or more years have been adopted on 23  January 1996;  the Undersecretariat of Foreign 
Trade issued a Communiqué (Export 96/12) in th e Official Gazette (No. 22532) and the Turk 
Eximbank is in charge of the execution of this Communiqué whose guidelines are in parallel to the 
principles of the OECD Consensus.  Additionally, since Turkey is a member of the ECG, she has 
committed to act on a best effort basis to comply with the guidelines of the Arrangement on officially 
supported export credits.  Turk Eximbank has  been  spending efforts to achieve a harmonization of 
conditions and thus a level playi ng field among ECAs at European a nd OECD level.  Hence, the Bank 
joins regular meetings of the ECG and closely monito rs the developments of the Group.  Besides, she 
complies with the reporting requirements of the Cr editor Reporting System (CRS);  also provides the 
details of the level of officially supported export cred its activity on a six monthly basis.  Additionally, 
the Bank completes the biannual cash flow questi onnaire and updates each year her chapter in the 
Yellow Book of the OECD, which explains the E xport Credit Financing Systems in OECD Member 
and Non-member Countries. 
 
Turk Eximbank is bound by the General Understa ndings of Berne Union, as she has been a 
full member of the Union since April 1994.  The Ba nk has to act in conformity with international 
rules and regulations as well as sound underwriting prin ciples.  She has already adopted the rules and 
criteria set in the General Understanding of the Un ion and sends periodic repor ts, regarding insurance 
and lending activities, non-payment situations, the terms of cover offered and commitments/offers 
available, to the Union. 
 
Turk Eximbank is also bound by the Agreem ent on Subsidies and Countervailing Measures of 
the WTO.  As it is known, in this Agreement, expor t subsidies including those illustrated in Annex I 
are prohibited subsides, Item (k) of this Annex stat es that export credits at rates below government's 
cost of funds are prohibited subsidies.  Item (j ) of the Annex states that export credit guarantee or 
insurance programmes at premium rates inadequate  to cover long-term operating costs and losses of 
programme are prohibited subsidies. 
 
PROGRAMMES 
 Turk Eximbank supports expor ters, export-oriented manufacturers, overseas investors and 
companies engaged in foreign currency earning services with short, medium and long-term cash and 
non-cash credit programmes.  Moreover, export recei vables are discounted in order to increase export 
trade volume and to ease the entry into new and ta rget markets through the promotion of sales on 
deferred payment conditions.  Turk Eximbank provi ded a total support of $7 billion in terms of 
financing support and pure cover, which accounted for 11 per cent of Turkey's exports in 2004. 
 CREDIT PROGRAMMES 
 
 Providing financial resources to industries with strong export potential is a key factor in Turkey's export-promotion strategy.  In keeping with this outward-oriented economic strategy, the 
Bank supports exporters through several credit programmes:  
1. Short-term Export Credits
 
Turk Eximbank extends short-term export credits to manufacturers, exporters and 
export-oriented manufacturers to meet their financia l needs especially at the pre-shipment stage.  
These credits are extended in Turkish Lira or in fore ign currency either directly by Turk Eximbank or 
via intermediation of selected Turkish commercial ba nks.  In 2004, 64 per cent of the short-term 
credits offered by Turk Eximbank was extended vi a intermediary Turkish commercial banks which 
are allocated credit lines and 36 per cent of the sh ort-term credits was extended directly by Turk 
Eximbank.  Credits are extended either in TL or in foreign currency under this programme.  In 2004, G/SCM/N/123/TUR/Add.1 
Page 6  
 
  56 per cent of the total credits was provided in TL and 44 per cent in foreign currency.  The Bank has 
financial supported 5.3 per cent of Turkey 's exports by her short-term credits. 
 
(i) Credits Extended via Commercial Banks 
Pre-shipment Export Credit (PSEC) Programme :  a short-term credit facility provided to 
manufacturers, export-oriented manufacturers a nd exporters starting from the early stages of 
production in all sectors.  The aim of the progra mme is to meet the financing needs of these 
companies in the early stages of production.  The programme has TL and foreign currency credit options. 
PSEC-Priority Development Areas Export Credit Programme :  a sub-programme of the 
PSEC extended in TL to companies located in Turkey 's priority development areas.  It aims to 
support exporters in these regions and ultimately eliminate the social and economic gaps that 
exists between these regions and Tu rkey's more developed regions. 
(ii) Credits Extended Directly by Turk Eximbank 
Foreign Trade Companies (FTC) Short-term Export Credit Programme :  extended to all 
companies entitled to foreign trade corporate compa ny/sectoral foreign trade company status, which is 
conferred by the Undersecre tariat of Foreign Trade.  It aims to provide financial support to large 
export trading companies for their export financin g needs.  The credit has TL and foreign currency 
options. 
Pre-Export Credit Programme :  a short-term credit facility provided to export-oriented 
manufacturers, manufacturer-exporters and exporters in the preparatory stage of exports.  It aims to 
increase the competitiveness of exporters in intern ational market and support export projects in the 
preparatory stage.  The credit h as TL and foreign currency options. 
Pre-Export Credit Programme for Sma ll and Medium Scale Enterprises (SMEs) :  a new 
short-term credit facility (effective since April 2003) extended both in TL and foreign currency to 
only small and medium scale enterprises.  It aims  to provide financial support to SMEs in the 
preparatory stage of their exports. 
(iii) Credits funded by the Central Bank of Turkey 
 Short-Term Export Credit Discount Programme :  a post-shipment finance facility in 
which export receivables subject to bankers' accep tances and/or irrevocable letters of credit are 
discounted by Turk Eximbank.  The programme aims to increase the competitiveness of Turkish 
exporters in international markets by enabling th em to sell Turkish goods on  deferred payment terms 
and eliminating overseas risks thereby encouraging them to enter into new and target markets. 
 
Short-Term Pre-shipment Rediscount Programme :  a pre-shipment  finance facility 
implemented within the framework of an additiona l limit to the post-shipment discount limit extended 
to Turk Eximbank by the Central Bank of Turk ey.  The programme aims to support Turkish 
manufacturers, exporters and manufactur er-exporters on pre-shipment basis. 
2. Medium-Term Export Credits (Project Credits)
 
Medium-term export credits are specific credit programmes, available for export transactions 
that cannot be covered under the sta ndard credit and guarantee programmes. 
  G/SCM/N/123/TUR/Add.1 
 Page 7 
 
 
  Overseas Chain Stores Investment Credit Programme :  Turk Eximbank supports the 
overseas investments of Turkish entrepreneurs fo r the establishment of shopping malls and chain 
stores in which various consumer goods may be o ffered for sale.  The programme aims to support 
direct sales of Turkish brand consumer goods in in ternational markets and establish Turkish brand 
names and promote Turkish designed goods abroad. 
Ship-Building and Exporting Financing Programme :  Turkish companies involved in 
shipbuilding and/or exporting of ships are provided di rect loans and/or Letters of Guarantee so that 
they may obtain pre-financing either in advance or  in instalments from the buyer or they can buy 
supplies and materials with payments having a fixe d term.  The programme aims to support Turkish 
dockyards in order to increase their shares and competitiveness in international markets. 
Letter of Guarantee Programme fo r Overseas Contractors' Services :  Turk Eximbank 
supports Turkish contractors by providing them letter of guarantee for their overseas projects.  The programme aims to enable Turkish contractors to su stain their current share in international markets 
and encourage them to enter into new markets. 
Specific Export Credit Programme :  is used to evaluate credit demands that cannot be met 
within the Bank's existing standard credit programmes.   It is a medium-term pre-shipment financing 
facility provided to manufacturers/exporters for project s that generate foreign currency.  It aims to 
meet the specific requirements of Turkish manuf acturers/exporters through medium-term financing 
and thus encourage the export of new products to new markets. 
3. Credits for Foreign Currency Earning Services
 
Tourism Marketing Credit Programme :  a short-term financing facility provided to 
Turkish travel agencies and airline companies for their promotional and marketing activities or 
services abroad.  The programme aims to increase the competitive ness of travel agencies through 
financing their promotional and marketing activities ab road and thus contribute to Turkey's balance of 
payments via increasing tourism revenues. 
 
International Transportation Marketing Credit Programme :  a short-term financing 
facility provided to inte rnational transportation companies to  increase their competitiveness.  The 
programme aims to contribute to Turkey's foreign exchange earnings.  According to the objectives put 
forward in Turk Eximbank's 2004 Annual Programme , on 21 June 2004, air transportation has been 
included in the International Transportati on Marketing Credit Programme, which covered 
international shipping and road transportation previously. 
Credit Programme for Foreign Currency Earning Services :  a financing facility provided 
to companies residing in Turkey for both their fo reign currency earning services abroad and export of 
services like software projects, consultancy services etc.  The programme aims to contribute to Turkey's foreign exchange earnings. 
4. Islamic Development Bank Backed Credits
 
IDF Export Financing Scheme (EFS) :  Turk Eximbank acts as an intermediary agency for 
the Export Financing Scheme of the IDB, in acco rdance with the agreement signed in 1988 between 
the two parties.  This programme entails financi ng on buyer credit basis.  The ultimate aim is to 
increase the competitiveness of Turkish exporters in current and new markets by enabling them to sell 
on deferred payment conditions. 
 
EFS Line :  EFS also entails a limit amounting to  USD 20 million provided by the IDB.  
Under this credit line allocated to Turk Eximbank by IDB, Turk Eximbank has the credit approval G/SCM/N/123/TUR/Add.1 
Page 8  
 
  authorisation and bears the buyer's risk.  The figur es in the table at the end of the document are the 
disbursements from this limit. 
 IDB Import Trade Financing Operations (ITFO Line) :  another limit provided by the 
IDB's  ITFO Line financing scheme to Turk Eximba nk, which is a medium-term financing facility.  It 
aims to provide finance for the imports of raw ma terials, semi-capital and capital goods from member 
and non-member countries of OIC, which are used in the production of export goods. 
5. Buyers' Credit and Guarantee Programme
: 
This is a medium- and long-term financial support programme, which has been mainly 
developed for the export of capital goods and turn-k ey investment projects to be undertaken by 
Turkish contractors.  The programme aims to st rengthen the competitiveness of Turkish exporters and 
contractors in international markets and to prov ide these companies a risk-free environment for their 
activities in markets at high political and commercia l risk.  Through this programme, Turk Eximbank 
enables foreign buyers to purchase Turkish goods  and services on deferred payment conditions.  
Within the framework of this programme, financin g facilities are allocated for project finance and 
may take the form of direct lendi ng or guarantee.  Project finance is  generally a medium- or long-term 
facility referring specifically to large individual pr ojects for which the eventual cash flow will repay 
the debt incurred to finance them and which are unde rtaken by Turkish contractors in the role as main 
or sub-contractor. 
 
INSURANCE PROGRAMMES 
 
 Through the export credit insurance programmes,  which are one of the Turk Eximbank's main 
areas of activity, export receivables are insured agai nst commercial and political risks within certain 
limits.  As an additional feature, export credit insurance programmes enable exporters to obtain 
funding from financial institutions via the insuran ce policies issued by Turk Eximbank as collateral. 
 
1. Short-term Export Credit Insurance  
Short-term Export Credit Insurance Programme :  cover is provided for the whole-
turnover basis for commercial and political risks.  Shipments up to 360 days to be effected on all 
payment terms from open-account to documentary cred its are covered in accordance with the country 
cover condition and credit limit approva l.  This post-shipment facility aims to provide insurance cover 
against political and commercial risks.  Since 1 January 2004, pre-shipment cover has also been 
provided for the insured firms within the framewo rk of the Short-Term Export Credit Insurance 
Programme. 
 
2. Medium and Long-term Insurance Facilities  
This is a single contract (single buyer) mu lti-transaction export credit insurance programme 
providing cover against commercial and/or political risks for the export of capital or semi-capital 
goods with credit terms up to five years, in princi ple.  Extended credit terms may be covered in line 
with the specific conditions and/or the require ment of the export transaction upon the Board's 
approval. 
 
Specific Export Credit Insurance Programme :  provides insurance cover for the export of 
capital and semi-capital goods sold with credit terms up to five years.  It aims to provide insurance 
cover against commercial and political risks for both pre-and post-shipment stages. 
  G/SCM/N/123/TUR/Add.1 
 Page 9 
 
 
  Post-shipment Political Risk Insurance Programme :  provides insurance cover for 
receivables with credit terms of up to 5 years rela ting to the export of capital and semi-capital goods.  
It aims to provide insurance cover against po litical risks only for the post-shipment stage. 
 Post-shipment Comprehensive Risk Insurance Programme :  provides insurance cover to 
medium and long-term exports of capital and semi -capital goods.  It aims to provide cover for both 
commercial and political risks only for the post shipment stage. 
 
3. Insurance Programme for Unfair Calling of Bonds 
 
In order to support the Turkish contracting sector, a new insurance programme covering the 
risk of unfair calling of bonds to be issued for Turkish contractors for their overseas project was 
introduced at the beginning of 2004.  This c over applies to bid bonds, advance payment and 
performance bonds for Turkish contractors in order to  eliminate the risk of unfair calling of bonds. 
4. Background and Authority for the Subsidy  
Turk Eximbank regularly presents her annual programmes to the Supreme Advisory and 
Credit Guidance Committee chaired by the State Minist er in charge of the Bank's activities.  The 
Committee approves Turk Eximbank's annual progra mmes, including country limit ceilings for the 
credit, insurance and guarantee programmes as well as Turk Eximbank's general strategy, targeted 
annual volumes and key objectives of the Turk Exim bank's short and medium term credit programmes 
for the year.  The Committee meets at least once a y ear and the Board of Directors of Turk Eximbank 
is obliged to observe the limits set.  The Committee also includes as members: 
 
• Undersecretary of the State Planning Organisation 
• Undersecretary of the Treasury 
• Undersecretary of Foreign Trade 
• Undersecretary of the Ministry of Industry and Commerce 
• Undersecretary of the Ministry of Finance 
• Governor of the Central Bank of the Republic of Turkey 
  The Chairman and Deputy Chairman of the Board of Directors and the Chief Executive 
Officer (CEO) of the Bank are also members of the Committee. 
 
5. Form of the Subsidy
 
Short-tem export credits 
 
In the form of a loan  Buyers' Credit and Guarantee Programme 
 
In may be in the form of direct lending or guarantee  
Other medium and long term export credits 
 
In the form of loan or guarantee  
Short, Medium and Long Term Insurance Facilitates 
 
In the form of export credit insurance . G/SCM/N/123/TUR/Add.1 
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  6. To Whom and How the Subsidy is Provided
 
CREDIT PROGRAMMES 
 
1. Short-term Export Credits  
(i) Credits Extended via Commercial Banks 
Pre-shipment Export Credit Programme :  extended to Sectoral Foreign Trade Companies 
(SFTC), manufacturers, manufacturer-exporters and e xporters for a maximum of 360 days.  The credit 
is extended via intermediary Tu rkish commercial banks, which are allocated credit lines following 
and evaluation process.  These commercial banks are res ponsible for the default risk of the borrowers.  
Turk Eximbank therefore assumes bank risk rather th an that of the exporter or manufacturer.  The 
interest rate is determined by Turk Eximbank acc ording to money market rates, loan repayment 
periods and cost of funding. 
PSEC – Priority Development Areas Export Credit Programme :  extended to companies 
located in Turkey's priority development areas.  In termediary banks are required to extend at least 5 
per cent and at most 25 per cent of their credit limit to firms in these regions.  In terest rate is slightly 
lower than the interest rate or PSEC TL 
(ii) Credits Extended Directly by Turk Eximbank 
Foreign Trade Companies Short-term Export Credit Programme :  extended to Foreign 
Trade Corporate Companies (FTCC) and Sector al Foreign Trade Companies (SFTC) with a 
repayment period of up to 180 days.  Applicants must be entitled to FTCC and SFTC status by the 
Undersecretariat of Foreign Trade.  The interest ra te is determined by Turk Eximbank according to 
money market rates, loan repaym ent periods and cost of funding. 
 Pre-export Credit Programme :  extended to manufacturer-e xporters, exporters and export 
oriented manufacturers except FTCC and SFTC for a maximum of 360 days and allocated on the basis of previous year's export performance.  The in terest rate for FX option is the same as that of 
PSEC FX and the rate for TL option is the same as that of PSEC TL. 
 Pre-export Credit Programme for SMEs :  extended to only small and medium scale 
enterprises directly by Turk Eximbank for 360 days.  The interest rate is lower than the interest rate of 
Pre-export Credit Programme. 
 
(iii) Credits funded by the Central Bank of Turkey 
Short-term Export Credit Discount Programme :  export receivables of Turkish exporters, 
manufacturer-exporters and manufacturers are discounted.  Export receivables with a maturity of up to 120 days are discounted on LIBOR+spread, using the funds allocated by the Central Bank of Turkey.  In some cases, Turk Eximbank may use its own resources after evaluation. 
 
Short-term Pre-shipment Rediscount Programme :  a pre-shipment financing facility 
provided for Turkish manufacturers, exporters a nd manufacturer-exporters.  Promissory notes issued 
by exporters on behalf of Turk Eximbank, which ha ve the aval of banks possessing a short-term letter 
of guarantee limit with Turk Eximbank and whic h have a maximum maturity of 120 days, are 
discounted under this limit.  This programme covers export transactions based on cash against 
documents and irrevocable letters of credit.  Su ch transactions including those based on cash against 
goods may also be discounted from Turk Eximbank's own resources after evaluation.  Rediscount rate 
is LIBOR+spread, where spread is  determined by Turk Eximbank.  G/SCM/N/123/TUR/Add.1 
 Page 11 
 
 
   
2. Medium-Term Export Credits (Project Credits)  
Overseas Chain Stores Investment Credit Programme :  extended to Turkish entrepreneurs 
who invest abroad for the establishment of shopping  malls and chain stores in foreign countries and to 
those who invest abroad for the establishment of st ores to sell their own brand.  Entrepreneurs who 
benefit from this programme may also benefit from short-term export credit programmes for the 
export of Turkish goods to be sold  in these stores.  Credits under this programme are granted for up to 
seven years.  Interest rates are determined according to the length of credit, the cost of funding and the 
credibility of the project exporter. 
 
Ship-Building and Exporting Financing Programme :  Turkish firms involved in ship-
building and/or the export of ships are eligible for this credit.  The terms and conditions of the loan 
and/or letter of guarantee are determined by Turk  Eximbank for each transaction, considering the 
contract signed between the buyer and the exporter. 
 
Letter of Guarantee Programme fo r Overseas Contractors' Services :  Turkish contractors 
who participate in tenders abroad are provided letters of guarantee by Turk Eximbank under the 
counter-guarantee of Turkish commercial banks.  Un der this programme, Turk Eximbank issues a bid-
bond, performance-bond and advance guarantee letter th rough a bank or directly to cover Turkish 
contractors responsibilities for the possible projects against the employer.  The commission rate and 
the payment term is determined by Turk Eximbank for each transaction. 
 
Specific Export Credit Programme :  companies that engage in factory construction and 
manufacturer/exporters that produce high-value-added industrial export goods are eligible for this 
programme.  It is provided with th e terms determined on project basis.  Interest rates are determined 
by Turk Eximbank on project basis. 
 
3. Credits for Foreign Currency Earning Services  
Tourism Marketing Credit Programme :  travel agencies selected by the Ministry of 
Tourism and private airlines that have obtai ned a working licence from the Ministry of 
Transportation, and those that attract more than  USD 500,000 worth of foreign currency to Turkey 
annually are eligible for this credit.  The maxi mum repayment period is 12 months.  The amount of 
credit is limited to a maximum of 10 per cent of th e foreign currency attracted by firms and 80 per 
cent of the total expenditures of the proposed proj ect, but it cannot exceed USD 2 million.  But for the 
tour organizing travel agencies and airline compan ies selected by the Ministry of Tourism, the 
maximum repayment  period can exceed one year and the amount of credit is limited to a maximum 
amount of 15 per cent of the foreign currency earnings, but in any case cannot exceed USD 4 million.  
The interest rate is determined by Turk Eximbank. 
 International Transportation Marketing Credit Programme :  international transportation 
companies resident in Turkey with a freight revenue of more than USD 500,000 in the previous year are eligible for this credit.  The maximum payment term is 360 days.  The credit amount is 100 per 
cent of the freight to be realized in the credit period, but cannot exceed the company limit.  The 
interest rate is determined by Turk Eximbank 
 Credit Programme for Foreign Currency Earning Services :  companies resident in Turkey 
which engage in foreign currency earning services abro ad or export of services like software projects, 
consultancy services are eligible for this credit.   The terms are determined on project basis. 
 G/SCM/N/123/TUR/Add.1 
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  4. Islamic Development Bank Backed Credits
 
 IDB Export Financing Scheme (EFS) :  provides credit facilities to importers residing not 
only in member countries of the Organisation of Islamic Conference (OIC), but also all countries for their imports from Turkey.  The ID PD has the credit approval authorisation and the buyer's risk for 
the transactions mediated by Turk Eximbank is borne by the IDB.  The mark-up rate is 
LIBOR+spread per annum where spread  is determined on case-by-case basis. 
  EFS Line :  following changes made in 1998, Turk Eximbank provides export finance for 
exports directed to any country, whether an Islami c country or any country within this limit.  The 
credibility of the importer's country or the credibility  of the bank provided guarantee is taken into 
account in credit applications, which are evaluated on transaction basis. 
  IDB Import Trade Financing Operations (ITFO Line) :  extended to Turkish 
manufacturer/exports or export oriented manufacturers to finance their import of inputs used in the 
production of export goods.  Export commitment is required and the amount of commitment is 
determined for each transaction by Turk Eximba nk.  The maximum repayment period is 30 months 
and the mark-up rate is LIBOR+spread.  5. Buyers' Credit and Guarantee Programme
 
Credit lines are extended under sovereign guara ntee to correspondent banks and financial 
institutions in various c ountries.  Turk Eximbank provides fina ncial support to the projects undertaken 
by Turkish contractors through its credit and/or guarantee programmes.  Project credit is provided 
through a correspondent bank, which will also be th e borrower of the loan, in the project buyer's 
country.  The total payment term cannot exceed eight years including the grace period.  Interest rates are established between the parties concerned in compliance with the OECD Consensus. 
INSURANCE PROGRAMMES 
 
1. Short-term Export Credit Insurance
 
Short-term Export Credit Insurance Programme :  all Turkish exporters, manufacturer-
exporters, FTCCs and SFTCs are eligible for this programme.  Premium is charged for commercial 
and political risks according to the risk classification of the buyer's country, credit length, payment term and the type of buyer (public or private). 
2. Medium and Long-term Insurance Facilities
 
Capital and semi-capital goods exported by Turkish companies may qualify for insurance 
under these programmes.  The premium rates are dete rmined by Turk Eximbank on transaction basis 
according to the risk classification of the buyer' s country, credit length, terms and conditions of 
payment and the type of the buyer (public/private). 
3. Insurance Programme for Unfair Calling of Bonds    
Bonds are issued by a bank in favour of the public buyer based in the borrowing countries for 
projects undertaken by Turkish contractors/Turkish subcontractor of an international consortium.  
Under this policy, Turk Eximbank is responsible to indemnify the Turkish contractor, due to a call 
being made under the bond by reason of events or  circumstances beyond the contractor's control. 
7. Subsidy per unit or in cases where this is not  possible, the total amount or the annual amount 
budgeted for that subsidy (indicating, if possible, the average subsidy per unit in the previous year).   G/SCM/N/123/TUR/Add.1 
 Page 13 
 
 
  Where provision of per unit subsidy information (for  the year covered by the notification, for the 
previous year, or both) is not possible, a full explanation . 
 Regarding short-term credit and insurance programmes :  Turk Eximbank complies with 
the Agreement on Subsides and Countervailing Measures of  the WTO.  Interest rates of these credits 
are determined by Turk Eximbank in accordance with the development in money markets, loan 
repayment periods and cost of funding.  Short-term  TL credits are mostly funded by equity, profits, 
and general provisions, which are regarded as cost free items.  The rates charged by Turk Eximbank 
reflect the government's cost of funding and the Bank rates charged by Turk Eximbank reflect the government's cost of funding and the Bank revises its ra tes according to the cha nges in market rates to 
prevent erosion of its resources from inflation.  Interest rates of short-term foreign currency loans are 
defined by Turk Eximbank as "LIBOR+spread", where the spread is calculated by taking into account 
the credit length and cost of fund s.  In order to fund these loans, Turk Eximbank relies heavily on 
funds borrowed from Turkish commercial banks  and also on international borrowings.  The interest 
rates of these loans also reflect the cost of funds . 
 
 Regard medium and long-term export cred it, guarantee and insurance facilities,  Turk 
Eximbank fully complies with OECD Arrangement , which determines the guidelines for the 
officially supported export credits for two years or more.   Regarding export credit insurance programmes , Turk Eximbank follows all the disciplines 
and requirements furnished in the OECD consensu s, Berne Union and the WTO.  The insurance 
activities of Turk Eximbank are similar with those of the traditional ECAs'.  Its basic insurance 
programmes are relatively well run and fully meet the underwriting requirements of international 
reinsurers.  For export insurance covering political and commercial risk, the exporter is charged a 
premium according to the risk classification of th e buyer's country, credit length, payment term and 
the type of buyer (public or private).  Like all other officially supported ECAs, only political risk is 
under the guarantee of the state;  the losses incurred due to commercia l risks are indemnified by Turk 
Eximbank from its own resources.  However, re -insurance treaties have been established with 
domestic and overseas re-insurance companies to ce de part of the commercial and political risks 
borne by Turk Eximbank under the short-term e xport credit insurance programme (70 per cent of 
commercial and political risks under short-term insura nce activities are covered by a reinsurers panel 
on the basis of a quota-share treaty).  Premium rates and premiums collected have been fairly 
adequate to cover the long-term operating  costs and losses of the programmes since 
commencement . 
 9. Duration of the subsidy
 
 
 There is no time limit to Turk Eximbank programmes.  The programmes may be revised, 
eliminated or new programmes are introduced accordi ng to the requirements of Turkish exporters and 
international rules and regulations.  G/SCM/N/123/TUR/Add.1 
Page 14  
 
  TURK EXIMBANK'S PROGRAMMES IN THE THREE MOST RECENT YEARS 
($ million) 
 
CREDITS 2002 2003 2004 
1. S-T EXPORT CREDIT PROGRAMMES    
 Pre-Shipment TL Export Credits 576.3  1,019.9  1,161.7 
 Pre-Shipment FX Export Credit 797.9 993.3 954.3 
 Foreign Trade Companies S-T TL Export Credit 279.2 536.9 518.7 
 Foreign Trade companies S-T FX Export Credit 257.5 257.7 278.2 
 Pre-Export TL Export Credit 112.7 160.8 167.9 
 Pre-Export FX Export Credit   94.0 165.7 177.8 
 Pre-Export Credit Programme for SMEs      -     9.9   18.9 
 S-T Export Credit Discount Programme   19.2   23.6   13.3 
 S-T Pre-Shipment Rediscount Programme   16.3   16.6   27.8 
2. MEDIUM TERM EXPORT CREDITS    
 Overseas Chain Stores Investment Credit Programme     0.3     0.0     0.0 
 Ship-Building and Exporting Financing Programme     0.5     4.2   12.6 
 Letter of Guarantee Programme for Overseas Contractors' Services      -     1.0     3.9 
 Specific Export Credit Programme     7.1     7.8     1.4 
3. CREDIT PROGRAMMES FOR FOREIGN CURRENCY EARNING 
SERVICES    
 Tourism Marketing Credit Programme     2.0     5.4   11.8 
 International Transportation Marketing Credit Programme     3.3     1.2     2.3 
 Credit Programme for Foreign Currency Earning Services      -     0.5     1.6 
4. IDB BACKED CREDITS    
 Export Financing Scheme-Line     2.4     0.0     0.0 
 IDB ITFO Line      -     0.3     0.0 
5. BUYERS' CREDIT & GUARANTEE PROGRAMMES   23.7   34.3     4.1 
INSURANCE    
1. S-T EXPORT CREDIT INSURANCE PROGRAMME  2,706  3,056  3,553 
2. MEDIUM AND L-T EXPORT CREDIT INSURANCE 
PROGRAMMES     0.0     0.0     0.0 
3. INSURANCE PROGRAMME FOR UNFAIR CALLING OF BONDS      - -     0.0 
 
 
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