Oct 27 2017

Turks should ignore ‘dirt’ about EBRD cuts, fund director Alkin says

A board member of Turkey’s state-run wealth fund said a report that European investment banks are cutting funding to Turkey was “manipulative” and part of a campaign to damage the country’s economy.

Amid a drop in the lira’s value this week, Kerim Alkin, an economist who sits on the board of Turkiye Wealth Fund Management Co. with Yigit Bulut, President Recep Tayyip Erdogan’s chief economic adviser, said Turks would face big losses should they buy dollars at current levels.

Alkin, writing in the pro-government Sabah newspaper, highlighted a report by Bloomberg on Oct. 25 that said the German government was pressuring the European Bank for Reconstruction and Development, the European Investment Bank and KfW Group to restrict funding to Turkish companies.

He said the news was designed to undermine the positive sentiment created by a very productive meeting between Erdogan and 52 of the nation’s banks the same day, in which Erdogan called on bank officials to issue more loans at lower interest rates to help boost economic growth. Alkin pointed to a statement by the EBRD on Oct. 26, in which it said funding for Turkey would continue, as proof the news was misleading.

There are attempts to sabotage Turkey’s economic growth performance. Why did the EBRD say Turkey was its most important customer and it would continue to support more investment?  Because we are among economies in the region and world such as China and India.

Bloomberg, citing more than a dozen unidentified banking officials, said that while banks and institutions have placed no formal freeze on funding, they’ve all imposed tighter restrictions. The increased scrutiny especially applies to financing for companies seen as being tied to, or influenced by, the Turkish government, it said.

The EBRD, in its statement to the state-run Anatolia news agency, didn’t specifically deny any details contained in the Bloomberg report. The bank remains committed to financing projects in Turkey and the country plays an extremely important role in its operations, it said.

An official at KfW Group in Frankfurt, who asked to remain anonymous, told Ahval that KfW has restricting funding for Turkish companies until further notice, on the request of the German government.

The reduction in the investment banks’ exposure to Turkey comes as relations between western governments and Ankara deteriorate. German Chancellor Angela Merkel said last week she would press the European Union to reduce financing for Turkey’s EU accession bid, citing the deterioration in its democracy. The United States suspended visa services in the country on Oct. 8 amid a spat over the arrest of Turkish nationals working at its consular mission and a legal case in New York linking illicit Iranian gold trade to senior Turkish officials.

The lira has dropped 3.3 percent this week. Plans by the U.S. Federal Reserve to increase interest rates are rendering emerging market assets less attractive to investors.

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