Riyadh: Turkiye ends $5 billion deposit agreement with Saudi Fund for Development
In a bold move to revamp its reserve management strategy, Turkiye has officially terminated a $5 billion deposit agreement with the Saudi Fund for Development. This decision, approved by Saudi authorities, is set to significantly reduce Turkiye’s external liabilities by approximately $7 billion through the decrease of deposit balances, as confirmed by the country’s central bank.
The Original Deal and Its Intentions
The initial deal, inked in March 2023, was aimed at providing crucial financial assistance to the Turkish economy amidst the challenges posed by devastating earthquakes and soaring inflation rates. However, as part of a comprehensive reassessment of international deposit transactions, Turkiye’s central bank has decided to bring this arrangement to an end.
Strategic Partnerships and Economic Agreements
Turkiye has been actively strengthening its economic ties with Gulf nations, including the UAE and Saudi Arabia, in a bid to attract foreign currency inflows. Recently, on March 3 2023, Turkiye and the UAE signed a comprehensive economic partnership agreement, aiming to slash tariffs on non-oil trade by 93 percent and boost bilateral trade from $19 billion to $40 billion within the next five years.
Economic Challenges and Recovery Efforts
Turkiye has faced significant economic challenges, including a shortage of international reserves and high inflation rates that have impacted living costs. The country’s economy grew by 4.5 percent in 2023, but is projected to slow down to 3 percent this year.
Long-Term Goals and Structural Reforms
To address long-standing issues such as high inflation, low productivity, and weak foreign investment, Turkiye’s new economic team, following the May 2023 elections, is focused on implementing robust fiscal measures and ambitious structural reforms to accelerate sustainable economic growth. The World Bank has emphasized the importance of these reforms to drive Turkiye’s economic stability and prosperity.