ISTANBUL () – Twelve Turkish banks will offer companies a total of 25 billion lira ($4.31 billion) as part of a Treasury-backed loan package, the banking association (TBB) said on Wednesday, in what would be Ankara’s latest effort to boost the economy. The package is intended to encourage lending after a currency crisis saw the lira lose nearly 30% of its value last year and drove the economy into recession. Companies would be able to use up to 50 million lira depending on their revenue, the TBB said, adding that 36-month loans will have an interest rate of CPI+4 and 48-month loans will be extended with a rate of CPI+4.5. All loans will have a six-month grace period for the principal amount and the interest rate will be revised every six months according to the consumer price index (CPI) level, it said. Some 80 percent, or 20 billion lira, of the loans will be backed by the government’s Credit Guarantee Fund, it added. A Treasury spokesman did not immediately comment. The lira crisis raised the cost of servicing foreign debt for companies who had for years been flourishing on cheap credit, leading to a build up of bad loans in banks. Finance Minister Berat Albayrak announced two $4.9 billion packages in the last two months, one supporting state banks and the other aimed at helping bail out some exporting sectors. He also announced two other packages aimed at boosting small and medium-sized businesses earlier this year. It is not surprising that the package comes ahead of the re-run of Istanbul mayoral elections on June 23, said Piotr Matys, emerging markets forex strategist at Rabobank. “Such policies might work only over the short-term and will not provide sustainable growth unless fundamental reforms are announced… to rebalance the economy in a sustainable way,” he said. State banks’ loans grew more than 11% in the first four months of 2019, while those of the whole sector grew 7%, data from the BDDK banking watchdog showed. Investors have voiced concern about the government’s encouragement of state banks to increase lending to support growth. Ziraat Bank, Is Bank, Halkbank, Garanti Bank, Yapi Kredi Bank, Vakifbank, Akbank, QNB Finansbank, Denizbank, TEB, Sekerbank and Eximbank will participate in the new loan package, the TBB said. Reporting by Ali Kucukgocmen and Ezgi Erkoyun; additional reporting by Tom Arnold in London; Editing by Jonathan Spicer and Andrew CawthorneOur Standards:The Thomson Trust Principles.