Turkey has extended until Jan. 1, 2028 a relief mechanism that lets heavily indebted or capital-impaired companies exclude certain foreign-exchange losses and pandemic-era expenses from insolvency calculations, giving distressed borrowers more time to avoid balance-sheet repair triggers.
Turkey extends FX loss relief to 2028
The move matters because it delays pressure on companies that might otherwise be forced into restructuring, capital raises or legal remedies under Article 376 of the Turkish Commercial Code. By softening how impairment is measured, Ankara is effectively easing the path for firms hit by lira volatility, high funding costs and lingering post-pandemic costs to stay operational.
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Under the new regulation, companies can continue to omit the full amount of unrealized FX losses on foreign-currency liabilities from calculations of capital loss or over-indebtedness. They can also exclude half of certain 2020 and 2021 expenses tied to leases, depreciation and payroll, a carve-out previously due to expire on Jan. 1, 2027.
For investors, the extension reduces near-term default and forced recapitalization risk in Turkey’s corporate sector, but it also postpones recognition of balance-sheet weakness. That can support short-term liquidity and bank asset quality, yet it leaves lenders and shareholders exposed to unresolved leverage if the underlying businesses do not recover.
The change lands against a broader backdrop of elevated debt stress globally and in Turkey, where currency swings and tighter financing conditions have kept corporate balance sheets under strain. Banks and creditors are likely to view the measure as a stabilizer in the near term, while equity holders may see another year of breathing room before tougher capital tests resume.
The key question now is whether companies use the extra time to strengthen capital structures or simply defer the same solvency problems to 2028, when the relief is set to expire.
| Entity | Gains | Losses |
|---|---|---|
| Distressed Turkish companies | ▲More time to avoid insolvency triggers | ▼Delayed cleanup of balance sheets |
| Banks and lenders | ▲Fewer near-term defaults | ▼Greater risk of unresolved leverage |
| Equity holders | ▲Lower chance of forced restructuring | ▼Weaker transparency on true capital loss |
| Turkish regulators | ▲Short-term corporate stability | ▼Postponed recognition of stress |
