The World Bank will double its exposure to Turkey to $35 billion to help stabilize the Middle East’s largest non-oil economy, Finance and Finance Minister Mehmet Şimşek announced on Wednesday, state-run Anadolu news agency reported. did.
Prime Minister Şimşek announced significant financial cooperation between Turkey and the World Bank for the period 2024-2028. The cooperation will be launched within the Country Partnership Framework (CPF) program, which promises additional funding of $18 billion for Turkey over the first three years, bringing the World Bank’s commitment to Turkey to $35 billion. This move will make Turkey the third largest country in the world to receive concessional loans from the World Bank.
The agreement represents the first vote of confidence in Turkey’s economic policy since the general election, Bloomberg previously reported.
Since June, Turkey has begun to reverse the unconventional, growth-at-all-costs economic policies that President Recep Tayyip Erdogan had pursued for years until his re-election in May. Simsek and the central bank are leading efforts to rein in runaway inflation and put the nearly $1 trillion economy on a more sustainable path.
The agreement covers a wide range of areas, including disaster resilience, energy, green transformation, combating climate change, increasing productivity, infrastructure, logistics, industry, agriculture, education, health and inclusion.
The program is jointly implemented by the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), all institutions of the World Bank Group, and aims to improve bank effectiveness. Masu. Activities in Türkiye. About two-thirds of the $18 billion financing package planned over the next three years will support private sector development with $6 billion from IBRD, $9 billion from IFC and $3 billion from MIGA short-term guarantees. It’s planned.
The program highlights the World Bank’s support for Turkish policymakers’ efforts to restore macroeconomic stability.
Simsek and former central bank governor Hafizeh Gey Erkan met with Ajay Banga, the president of a Washington-based lender, in India in July, Turkish state media reported at the time.
Some of the new funds could be used to help rebuild areas affected by two major earthquakes that struck southeast Turkey on February 6, 2023, killing more than 50,000 people. expensive.
The government has promised to build about 200,000 homes for survivors within a year, and the cost of rebuilding is estimated at about $100 billion. The World Bank has already loaned Turkey 910.5 million euros ($980 million) for reconstruction, as part of a previous $17 billion allocation.
After the earthquake, Turkey’s current account deficit widened to about 6% of gross domestic product (GDP) as exporters in the affected areas suffered power outages and ultra-low borrowing costs encouraged imports.
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