The World Bank is committed to accompanying Türkiye in implementing policies to help stabilize the economy and is anticipating presenting a new support program, according to the bank’s country director.
“In addition to our ongoing $17 billion (TL 456.30 billion) program, over the next three years, we anticipate preparing and presenting new operations to the World Bank Group’s Board for $18 billion,” Humberto Lopez, World Bank country director for Türkiye told Anadolu Agency (AA) in an interview on Thursday.
This amount includes direct lending to the government as well as support to the private sector, he explained.
The package, with tentative total financing of around $35 billion when all financing instruments are considered, “responds to the strong commitment shown, and more importantly, the actions taken by the administration to restore macroeconomic stability,” Lopez stressed.
Praising Türkiye’s economic performance over the last two decades, Lopez highlighted that persistent inflation, an overvalued exchange rate and fiscal pressures emerging from the spending needs associated with the devastating earthquakes this February put this track record at risk.
Regarding the support provided by the World Bank in the aftermath of the February earthquakes, Lopez noted that the International Bank for Reconstruction and Development (IBRD) in June approved $1.45 billion for two operations to help affected areas rebuild municipal infrastructure, provide health services to the public, rebuild rural housing, and help small and medium-sized enterprises (SMEs) recover from the natural disaster so that employment levels can be maintained.
Detailing the scope of funding to be provided in the next three years, Lopez expressed that “we are determined to accompany Türkiye in the implementation of policies that will stabilize the economy.”
“In this regard, we believe that the monetary policy tightening being implemented by the central bank, the unwinding of distortive financial regulations and the fiscal revenue measures to curtail the fiscal deficit being pursued by the Ministry of Finance are steps in the right direction,” he said.
“This package responds to the strong determination and, more importantly, the steps taken by the administration to restore macroeconomic stability. And this package leverages the World Bank Group’s ability to mobilize resources through its private sector arm. In terms of the World Bank program, we expect to continue our participation in the priority areas where we are currently active, especially in climate change, which is a very up-to-date problem as evidenced by the record temperatures this summer.”
The remarks came on the heels of Wednesday’s unveiling of the government’s medium-term economic program, aiming for an average 4.5% gross domestic product (GDP) growth in 2024-2026, joining high-income countries with an economic size exceeding $1.3 trillion, and using monetary, fiscal and income policies to eliminate structural factors that lead to high inflation.
