Can Teoman
Dec 25 2017

Decree gives Turkish treasury guarantee for wealth fund borrowing

While Turkey is riveted by a decree published in the final week of 2017 giving impunity for crimes committed by those ‘fighting terrorism,’ another decree has also introduced a vital change in the economic realm by giving the Turkish Wealth Fund (TVF) a treasury guarantee for its borrowing.

According to the new regulation published in the Official Gazette on Sunday, the TVF will not directly take on debts, but it has been allowed it to take on the foreign debts of the many companies with public shareholdings that are under the management of the controversial fund. For example, Ziraat Bank or oil refiner BOTAŞ can take on debts with a treasury guarantee, thereafter transferring these debts to the fund.

The fund, created in the beginning of 2017, includes the entirety of Ziraat Bank, BOTAŞ, Turkish Petroleum, public post office PTT, the Istanbul Stock Exchange, the treasury’s 6.68 percent share in Türk Telekom and around half of the following companies: boron producer Eti Mining, tea producer Çaykur, Turkish Airlines and Halkbank.

There has been speculation that both Ziraat Bank and Halkbank may face fines in relation to an ongoing Iran sanctions case in the United States.

Among the aims listed in establishing the TVF was the financing of the so-called “crazy projects” of the ruling Justice and Development Party (AKP), which have been criticised for allowing contractors to produce unearned wealth, leading the opposition to express fears that it would “borrow in the name of the public”.

The government, for its part, rejected these claims. Economy Minister Nihat Zeybekçi told parliament on August 16, 2016 that “There will never, ever be a treasury guarantee for all the debts of the company that is to be founded: it will never be considered as public debt.”

But this new regulation has rendered Zeybekçi’s word null.