The Islamic Development Bank Group (IsDB) will provide $6.3 billion for projects in Turkey over the next two years, the state-run Anadolu news agency reported on Monday.
Turkish Finance Minister Mehmet Şimşek made the announcement at the IsDB’s annual meeting in Riyadh, where the bank’s country strategy for Turkey was approved.
The funds will be allocated to various sectors, including education, health, transportation, finance, agriculture, industry, energy and infrastructure, Şimşek said.
The funds will be provided by four institutions within the Islamic Development Bank Group: $2 billion from the Islamic Development Bank, $900 million from the International Islamic Trade Finance Corporation (ITFC), $300 million from the Islamic Corporation for the Development of the Private Sector (ICD) and $3.1 billion from The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC).
Şimşek pointed out that Turkey has received $12.9 billion from the Islamic Development Bank Group since its establishment, making it the fourth largest recipient of financing from the bank.
The announcement comes after the World Bank recently increased its funding to Turkey to $35 billion following the country’s medium-term program.
The Islamic Development Bank Group’s commitment is seen as a sign of confidence in Turkey’s economic program.
“This financing will support our development priorities, which are in line with our 12th Development Plan and our medium-term program,” Şimşek said. “Thanks to the economic program we have implemented, the flow of external resources to Turkey continues to be strong.”
Turkey in June began to undo years of unconventional, growth-at-all-costs economic policies pushed by President Recep Tayyip Erdoğan until his re-election in May. Şimşek and the central bank are leading efforts to rein in runaway inflation and put the nearly $1 trillion economy on a more sustainable path.
Turkey’s high inflation, currently running above 65 percent, and the continued loss in value of the lira, which has significantly decreased Turks’ purchasing power, have been shown by observers as being among the main reasons behind the loss of support for Erdoğan’s ruling Justice and Development Party (AKP) in the local elections held on March 31.
Accompanying the spiking inflation are historic highs in interest rates after the central bank’s decision to raise the key interest rate to 50 percent.
This move marked a significant departure from the country’s previous economic policy and sparked criticism of the Justice and Development Party (AKP) government’s handling of the economy.