• Turkey’s economy has been badly strained by a slumping lira and soaring inflation of over 85% and a swap or deposit agreement could boost Turkey’s diminished foreign currency reserves.

DUBAI/ANKARA-

In a move described by analysts as an “economic life-saver” for Turkish President Recep Tayyip Erdogan, Saudi Arabia is finalising a deal with Ankara to place a $5 billion deposit at Turkey’s central bank.

“We are in final discussion to make a USD 5 billion deposit with the central bank of (Turkey),”a Saudi ministry of finance spokesman said on Tuesday.

The Turkish central bank declined to comment on the issue. But a Turkish official with the knowledge of the matter said discussions are at the final stage with Saudi Arabia over a swap or deposit agreement.

Turkey’s economy has been badly strained by a slumping lira and soaring inflation of over 85% and a swap or deposit agreement could boost Turkey’s diminished foreign currency reserves.

Turkey, which faces its worst economic crisis in two decades, has been trying to draw investments from wealthy Gulf Arab states. Beside reconciling with Riyadh, Ankara has taken steps to improve relations with the United Arab Emirates, Egypt and Israel.

Analysts say the Saudi deposit deal could help Erdogan shore up support ahead of elections due by June 2023. The Turkish president has led the country for almost 20 years, first as prime minister and then as president. But support for him and his political alliance has steadily declined amid high inflation and a cost of living crisis.

Turkey’s central bank has swap deals in local currencies with several of its counterparts worth a total of $28 billion. It signed a deal with China for $6 billion, with Qatar for $15 billion, with the United Arab Emirates for around $5 billion.

The momentum of talks between the countries’ central banks comes after Ankara and Riyadh’s joint effort to mend ties that were ruptured after the murder of Saudi journalist Jamal Khashoggi in 2018. Ankara and Riyadh have also diverged on regional policies with Turkey backing the Muslim Brotherhood considered a terrorist organisation by Saudi Arabia and both countries competing for influence in the Sunni Muslim world.

  • News Agencies

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