Turkey transfers state shares in major companies to Wealth Fund

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Shares belonging to the Turkish Treasury in a number of companies including Ziraat Bank, the Turkish Petroleum Corporation (TPAO), satellite network TÜRKSAT, the Petroleum Pipeline Corporation (BOTAŞ), Borsa İstanbul (BİST), Eti Mining, Çaykur and postal service PTT have been transferred by Cabinet decision to the Turkey Wealth Fund, according to a written statement from the Prime Ministry on Sunday.

Turkey is setting up the wealth fund – Turkey Asset Management – with initial paid-in capital of 50 million liras ($16 million), to be financed from the state privatization fund.

Its strategic aim is to generate annual growth of 1.5 percent over the next 10 years.

The law on the establishment of Turkey Wealth Fund was published in the Official Gazette on Aug.26. The Turkish government pushed for the fund’s establishment in recent in a bid to provide foreign financing for planned infrastructure projects.

Economist Uğur Gürses criticized the Cabinet decision for the transfer of the state shares in some companies, describing the move as “unlawful and meaningless.”

Speaking to T24 news portal, Gürses said with the decision, the companies which were transferred to the Wealth Fund will from now on be used arbitrarily and they have gone out of the Parliament’s budget inspections.

 

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1 COMMENT

  1. Following recent rating agency decisions (Moody’s, S&P and Fitch), Turkish companies have been experiencing a severe credit-crunch lately. Banking access to foreign wholesale funds have dried out (or too expensive) and as a result a credit rationing is put in place by domestic banks. Without reasonably priced credit, economic growth may come to an abrupt halt, major projects cancelled/deferred and unemployment to soar.
    To circumvent this negative loop, AKP Government decided to pool country’s crown jewels into a Wealth Fund and seek “Islamic Finance” from Gulf States (in my opinion). Already indebted, these companies can only borrow through Islamic finance where interest-free loans can be advanced. We shall see if Gulf states will be generous enough to advance large USD funds to these balance sheet stretched companies. Islamic Finance involves lender’s equity like participation, it is far more riskier than straight credit risk where loans are secured against borrower’s assets. Lenders beware!

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