World Bank to finance extra $1B to Türkiye’s earthquake zone in 2025

ISTANBUL

The World Bank will finance an additional $1 billion to Türkiye’s earthquake zone in 2025, bringing the total resources the bank provided to the country’s affected region in the southeast to $4 billion.

Humberto Lopez, World Bank Country Director for Türkiye, said at a recent meeting in Istanbul that the World Bank and the International Finance Corporation (IFC) operate in different parts of Türkiye and work together on projects involving infrastructure, health, water distribution systems, and hospitals in the country’s earthquake-zone in the southeast.

Lopez stated that the further stability and predictability in the Turkish economy due to structural reforms will positively impact investors, as companies investing in Türkiye do so for the long-term, and access to logistics and energy are key areas for firms investing in the country for 10-15 years.

He noted Türkiye’s potential to mutually connect multiple countries via infrastructure projects, such as the Middle Corridor, the Development Road, and the railway project on the Yavuz Sultan Selim Bridge that goes over the Bosphorus Strait.

Lopez mentioned that the bank’s $660 million financing to Türkiye’s efforts to expand electrified railways is not only about lowering carbon emissions but also to reduce the transport costs between the east and the west.

Wiebke Schloemer, IFC director for Türkiye and Central Asia, said at the same meeting that the IFC focuses on the private sector of the earthquake-affected region, noting the private sector’s high adaptability and capacity to produce, thanks to the country’s strategic geographical location and its young workforce.

Schloemer mentioned that foreign direct investors are closely monitoring the macroeconomic trends, the stability in the Turkish economy, and the rating upgrades by credit rating agencies.

She highlighted that geopolitical and political risks are everywhere in the world and they are not limited to Türkiye.

Schloemer stated that the stabilization efforts in the Turkish economy have started to bear fruit for 18 to 19 months now as downgrades to its credit rating have slowed, which is a positive indicator for many investors, both international and domestic, as the country’s 5-year credit default swap (CDS) fell from 600 to around 270, showing signs of stabilization.

She noted that Türkiye is one of the leading and developing countries in the world and many investors are on the lookout due to its economic potential and opportunities.

She said that rapid changes in policies may be common from time to time but it can affect investor confidence, noting that continuity is needed to ensure predictability, adding that the IFC expects a significant decline to inflation, though it is not able to provide an exact figure.

*Writing by Emir Yildirim