Last week, Turkey’s government appointed the head of the Privatization Administration, Mehmet Bostan, as director general and board chairman of a newly established public company, the Turkish Sovereign Wealth Fund, moving a step closer to the creation of a sovereign wealth fund. The plan was first brought up in late July and hastily passed through parliament the following month.

The world's largest sovereign wealth funds include Norway’s Government Pension Fund, the United Arab Emirates’ Abu Dhabi Investment Authority, the China Investment Corporation, the Kuwait Investment Authority and the Saudi Arabian Monetary Agency’s holdings. Generally, their revenues come from budgetary surpluses. In other words, sovereign wealth funds are created by countries that have current account surpluses and possess some natural riches, mostly oil and natural gas.

What about Turkey’s? Other than its name, the Turkish fund has little in common with the conventional ones, for Turkey is not a country with current account and budgetary surpluses. Rather, as Ankara’s medium-term economic program indicates, domestic savings amount to only 14% of gross domestic product (GDP), meaning that Turkey relies heavily on external financing.

Growing economic, political and geopolitical risks have curbed the flow of foreign capital to Turkey, resulting in a slowdown in economic growth. Ankara’s growth target for 2016 was 4%, but earlier this month the International Monetary Fund (IMF) projected the year-end rate would be 2.9%, stressing that external financing needs “remain large and limit fiscal space.” All this is another confirmation that the Turkish economy is going through a period of financial bottlenecks.