Bloomberg: World Bank in Talks to Double Turkey Exposure to $35 Billion

As reported by Bloomberg, the World Bank is in advanced talks to potentially double its exposure to Turkey to $35 billion to help stabilize Turkish economy.

The scheme is to pledge of as much as $18 billion for projects over the next three years, in addition to more than $17 billion in programs already in place. There will be direct lending to the government as well as support for the private sector.

Turkey’s Treasury and Finance Ministry declined to comment on the talks. The World Bank also declined to comment.

Bloomberg interprets the deal as a vote of confidence in Turkey’s new economic administration of Treasury and Finance Minister Mehmet Simsek and central bank Governor Hafize Gaye Erkan whom since June began undoing years of unconventional, growth-at-all-costs economic policies pushed by President Erdogan until his re-election in May. Simsek and Erkan are put in charge by Erdogan to rein in runaway inflation and put the nearly $1 trillion economy on a more sustainable path.

Simsek and Erkan met with Ajay Banga, the president of the Washington-based lender, in India in July, Turkish state media reported at the time.

Some of the newly dispatched funds will likely be allocated to help in reconstruction of areas devastated by two massive earthquakes that struck Turkey’s southeast on Feb. 6, killing more than 50,000 people.

The government has pledged to build some 200,000 residential units within a year for survivors, and estimated the cost of reconstruction at about $100 billion. The World Bank has already extended a €910.5 million ($980 million) loan to Turkey for rebuilding, part of its existing $17-billion allocation.