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there are aspects of PPP contracts that leave the government exposed to demand and exchange rate risks.
“​Detailed information on PPP projects in Turkey is hard to come by​, but figures from the World Bank show that total investments under such agreements amounted to $145bn (19% of GDP) by the end of 2019. Almost a third of PPP investment has been geared towards the construction of airports, including the new Istanbul Airport opened last year. Returns on these investments will suffer given the hit to the travel and tourism sectors from the coronavirus crisis, potentially causing contingent liabilities to come due,” Tuvey noted.
In addition, the government has underwritten bank loans using its Credit Guarantee Fund (KGF). The size of the KGF was recently doubled, from Turkish lira (TRY) 25bn ($3.7bn) to TRY50bn (1.3% of GDP) as part of the government’s response to the coronavirus crisis. “Given that there had already been a surge in credit before the coronavirus outbreak took hold, there is a risk that lending under the expanded KGF is of low quality,” Tuvey said.
6.1.2​ Budget dynamics - privatization
Zafer Sonmez, managing director of Turkey's sovereign wealth fund (TWF), has ​said​ that the fund has acquired almost 20 precious metals mines.
The Turkey Wealth Fund (TWF) made the purchases as part of a plan to form a large metal holding company, he reportedly added.
The fund is also backing a project to produce electricity from domestic coal and plans to activate the Afsin-Elbistan C segment, a large lignite deposit in Kahramanmaras province.
In June, the fund became the top shareholder in Turkcell (See 9.2.7). It is again reported that it was seeking a eurobond sale (See 8.5.1).
In April, TWF bought all the shares in the six public insurance companies operating in Turkey for Turkish lira (TRY) 6.54bn ($963mn). It is following a finance ministry plan to consolidate all public insurance companies.
In 2019, Turkey’s sovereign wealth fund mandated Ernst & Young to evaluate options to privatize horse racing, betting operations. TWF hired consultancy Ernst & Young to advise on the privatisation of the country’s national lottery, Milli Piyango.
TVF has stakes in major Turkish companies including flag carrier Turkish Airlines, big banks and Turk Telekom.
In December, Vakifbank shares, representing a 58.45% stake in the lender, were transferred to the Treasury.
TVF has updated its ​website​ and released an ​annual report ​(or rather, something approaching an annual report for 2018). It ​has​ a BB-/Stable rating from Fitch Ratings in line with the sovereign rating.
6.2 ​Debt
Turkey's central government debt amounted to Turkish lira (TRY) 1.63 trillion ($238bn) at the end of May, marking a rise of 34% y/y, according to latest ​data from the finance ministry.
43​ TURKEY Country Report​ July 2020 ​ ​www.intellinews.com